It's a technical term for sharing of meta-data. It has absolutely nothing to do with Web design or SEO, and anyone who says otherwise needs to step away from the keyboard right now and take up something far less dangerous -- like safeguarding America's nuclear missile launch codes.
web 2.0 is second name of social media optimization. read more here http://seoprofessional24.wordpress.com/2009/07/13/promote-your-website-using-web-2-0/
Simply put, Web 2.0 is a perceived transition of the web to web applications. Web 2.0 is the next generation of technology solutions where interactive content is the norm. There is no agreement on exactly what Web 2.0 means, depending on who you are speaking with, you may receive different explanations. At it's heart, Web 2.0 is about the maturity of the Web and businesses that are thriving online. While many refer to Web 2.0 as companies that employ powerful web technologies, the key components of the new web are said to include: the web as a platform, collaboration, and syndication. More - http://www.small-business-software.net/what-is-web-2.htm
Hi here are some differences between WEB 1.0 and WEB 2.0 which can help you to understand web 2.0 in comparison with web 1.0 , just read it from here , Difference between Web 1.0 and Web 2.0
If you ask me It's another stupid BIG word added to the web industry the funny thing is that even O'Reily fails to explain fully what web 2.0 is lol