Yeah, it's pretty much exactly like the system in WoW. Essentially, you turn old gear into a crafting material which allows you to enchant the new gear you just got with bonus stats. It may not be exact in name or procedure, but the end result is identical.
And WoW got that system from Final Fantasy, which came out years earlier.
So, we really shouldn't be portraying materia as something FF is copying from WoW, when really, it's something numerous games have attempted to copy from Final Fantasy.
Remember, Final Fantasy VII is one of the most popular video games of all time. There's no shame in WoW using systems from that game.
Edited, Jun 25th 2013 9:26am by Thayos