Web 2.0 makes better use of the Web’s inherent functionality as a communication & collaboration tool. The first generation of websites (Web 1.0) functioned much the same way that traditional publishers operated. In other words, the content of a website or web-based service was “published" by the site owner much in the same way that a traditional publisher publishes a book. The control and presentation of the content was determined by the site owner.

Web 2.0 puts the power in the hands of the people using the service. Web 2.0 is based on and encourages user participation & collaboration in a way that increases that value & quality of the web-based service that they are contributing to

Since Web 2.0 lacks a well defined set of standards there is still much debate as to what exactly constitutes Web 2.0. Many websites had many of the Web 2.0 features and functionality many years before “Web 2.0" was coined. These were features such as user reviews and the ability for web developers to communicate and modify the functionality of a website so that it better interfaced with their own applications and Websites.

Even though the term Web 2.0 still has a loose definition, there are some common features. They include the following:

Using The Network as a platform

This simply means allowing users to use and contribute to the web-based application entirely through their browser.

User-friendly Interactive Interface

Web 2.0 applications offer a simple method of interacting with the application without much more than basic point and click knowledge. A great example is the wildly popular MySpace. This very Web 2.0 application has been built entirely by the contributions of a devoted user base, many of whom are in their early teens.

User owned & controlled data

Web 2.0 gives users the ability to create and distribute their data in the form of ideas, videos, music, articles, reviews, ratings while freely collaborating with other users. No longer is the content limited and restricted to the personal taste of the application owner.

Tim O'Reilly gave examples of products and services in his "four plus one" levels in the hierarchy of Web 2.0-ness. Here is an overview of what he had to say.

Level 3 Applications

These are applications that are only possible on the Internet and actually become better as more people use them. They are also the most “Web 2.0"

Level 3 Examples:

E-Bay

Craig’s List

Wikipedia

Skype

del.icio.us

Dodgeball

Level 2 Applications

These are applications that can operate offline but are much more effective and functional online.

Level 2 Example: Flickr

Level 1 Applications

Level 3 applications are applications that are available online but benefit from additional features online.

Level 1 Example: Google Docs

Level 0 Applications

These are applications would also work as well offline. The following are the examples O'Reilly originally gave although as they evolve and begin to allow morer user contribution they will move to level 2

Level 0 Examples:

MapQuest

Yahoo! Local

Google Maps

In summary Web 2.0 is about true Internet democracy. The content and functionality of a web 2.0 application is no longer dictated by the owner of the website or the web-based application. Users are allowed and encouraged to contribute, collaborate and improve a web-based application based on the features, functionality and content that they deem to be important, entertaining and informative.

If other users find value in the contributions it increases the value and quality of the service and encourages further participation. Web 2.0 also creates a viral environment in that people want to share their contributions with others so they not only become contributors but also promoters of the application itself. Web 2.0 has truly given people the power to better connect, create and improve the Web 2.0 application that they are part of.