This neat explaination was provided by Site Pro News

Just what exactly is Web 2.0? What does it mean? Is there a precise definition that all webmasters can get their heads around and understand? Not really, many believe Web 2.0 is just another one of those contrived buzzwords, signifying mostly marketing hype!

However, perhaps the simple definition can be found in the word “you”! Time magazine probably summed it up best by making reference to the “you” in user generated content. Web 2.0 is basically all the platforms that give us this brave new user-powered interactive Internet, generally referred to as ‘social media’.

Web 2.0 can be seen or manifested in such sites as YouTube, MySpace, Del.icio.us, Digg, Squidoo… Web 2.0 uses scripting languages such as Python, Perl PHP, RSS… to construct interactive platforms that websites can use to create all this user-generated content.

Many refer to these evolving formats and scripting platforms under the name AJAX and no this does not refer to the popular cleaning agent under your kitchen sink! This AJAX (Asynchronous JavaScrípt and XML) comes from Google and takes web based interactive programs such as Google Maps, something that’s usually associated with desktop applications, but is now being applied on the web. If you have used Google Earth, you will realize how powerful and revolutionary these new applications can be, not to mention, they are a whole lot of fun.