I've never been fond of the term "Web 2.0" - in part because it's often used to imply a new suite of technologies even though it's largely founded on concepts that have been well-established (but not widely-utilized) for over a decade. For example, XMLHttpRequest - the backbone of the AJAX style of development - first shipped with Internet Explorer 5.0 in 1999. The term thus struck me as another example of the popular trend in software of rebranding old technologies as the "next big thing".
More recently, though, I've heard the term applied less to a technical approach and more to a general design aesthetic. Sites earning this label often employ a very simple interface emphasized by large form elements, minimal features and even a specific visual style, color palette. Think Twitter, not Facebook. In this light, "Web 2.0" has become synonymous with "what's popular on the web".
Which leads me to a discussion of the popularity of minimalism, dynamic data and the influence of Ruby on Rails - but I'll save that for a later date.