What is Web 2.0?

Web 2.0 is the term given to describe a second generation of the World Wide Web that is focused on the ability for people to collaborate and share information online. Web 2.0 basically refers to the transition from static HTML Web pages to a more dynamic Web that is more organized and is based on serving Web applications to users. Other improved functionality of Web 2.0 includes open communication with an emphasis on Web-based communities of users, and more open sharing of information. Over time Web 2.0 has been used more as a marketing term than a computer-science-based term. Blogs, wikis, and Web services are all seen as components of Web 2.0.

Here's a short video about Web 2.0.

Examples of Web 2.0

Web 2.0 can be best described through such sites as:
Myspace is a social networking website with an interactive, user-submitted network of friends, personal profiles, blogs, groups, photos, music, and videos
Flickr is an image and video hosting website, web services suite, and online community platform.
Youtube is a video sharing website where users can upload, view and sharevideo clips
eBay: an online auction and shopping website in which people and businesses buy and sell goods and services worldwide.
Facebook Users can join networks organized by city, workplace, school, and region to connect and interact with other people.
These sites have evolved from Web 1.0 to 2.0 as shown in this diagram by Tim O'Reillly and gives a better understanding of how Web 2.0 came about.
(http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html)