In the the lead article of todays Guardian Technology 'web2.0' is explained for the masses.
Where Web 1.0 was mainly a publishing medium, Web 2.0 offers more flexibility and interactivity. Instead of static pages, Web 2.0 sites provide user interfaces that are more like simple desktop applications - or, indeed, are online versions of simple desktop applications.

Examples include the Writely word processor, Numsum spreadsheet, Zimbra (like Outlook) and the 37signals cluster of Basecamp, Backpack, Writeboard and Ta-Da List. Their appeal is that you can use them anywhere there is a working internet, and they allow you to collaborate with other people online.