The best explanation of web 2.0 can be found at http://en.wikipedia.org/wiki/Web_2
That explains it better than I (and I'm sure anyone else) could.
Long story short though I suppose, its basically taking applications, having them be web based and more interactive than they used to, easier to use, friendlier. Web 2.0 examples are flickr, smugmug, del.icio.us.
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