Although Eric Schmidt claimed that Web 2.0 is just a marketing buzzword, i know that he knows better, that it is not. My take, is that large chunk of web 2.0 revolves around participation and social networking. Below is what i think of what web 2.0 is (ehem.. excuse my horrible (MS)paint job)

1 . User participation

Blogs, comments, user tagging (Digg) , social bookmarkings, etc. Basically, more power to the user on how things should be rather than presenting them a product as is.

2. Usability

Clean, simple looks, larger fonts for readability. Centralized and more focused layout, AJAX etc.

3 . Standard

CSS, cross browser, cross platform structural and presentation markup.

4. Open platform

Open APIs, open developement etc

5. Rich media

Video, podcast, animation etc

6. Aesthetic

And of course, it has to be beautiful (this is where the rounded edges comes to play!)