Nothing really. Just a term with no definition. I believe the technical definition (as in, from the guy who first used the word) is websites for user interactivity/direct user powered sites like Wikipedia.
From Wiki: Web 2.0 is a term describing the trend in the use of World Wide Web technology and web design that aims to enhance creativity, information sharing, and, most notably, collaboration among users. These concepts have led to the development and evolution of web-based communities and hosted services, such as social-networking sites, wikis, blogs, and folksonomies. The term became notable after the first O'Reilly Media Web 2.0 conference in 2004.
itcn and hemalshah are correct. however, the term 'web 2.0' has also come to define a style of design. See here for more info: FontShop.com
In my knowledge web 2.0 are sites with no flash and more css .table less sites. They are more seo friendly.