According to Wikipedia, Web 2.0, a phrase coined by O'Reilly Media in 2003 and popularized by the first Web 2.0 conference in 2004 , refers to a perceived second generation of web-based communities and hosted services — such as social-networking sites, wikis and folksonomies — which facilitate collaboration and sharing between users. O'Reilly Media titled a series of conferences around the phrase, and it has since become widely adopted.
Although the term suggests a new version of the World Wide Web, it does not refer to an update to Web technical specifications, but to changes in the ways software developers and end-users use the web as a platform. According to Tim O'Reilly, "Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform." 
As used by its supporters, the phrase "Web 2.0" can also refer to one or more of the following:
- the transition of web-sites from isolated information silos to sources of content and functionality, thus becoming computing platforms serving web applications to end-users
- a social phenomenon embracing an approach to generating and distributing Web content itself, characterized by open communication, decentralization of authority, freedom to share and re-use, and "the market as a conversation"
- a pronounced distinction between functionality and web technology, enabling significantly easier creation of new business models and processes by using readily available intuitive modular elements
- enhanced organization and categorization of content, emphasizing deep linking
Check out this link for another great video HERE. This explains the differences between Web 1.0 and Web 2.0: