Web 2.0

from Wikipedia:

"The phrase Web 2.0 was coined by O'Reilly Media to refer to a supposed second generation of Internet-based services that let people collaborate and share information online in a new way—such as social networking sites, wikis, communication tools, and folksonomies. O'Reilly Media, in collaboration with MediaLive International, used the phrase as a title for a series of conferences and since then it has become a popular, if ill-defined and often criticized, buzzword amongst the technical and marketing communities..."

Adding on to what at2004 quoted, Web 2.0 has a few trademarks. There are a number of major elements which are usually considered representative of Web 2.0

• Reliance on contribution of images, video or  information from users. For example, Flickr, Youtube and Yedda all rely on the reader's contribution.
• Appliance resemblance. Frequently Web 2.0 websites will resemble a layout usually attributed to desktop programs. This includes the ability to reload information without reloading the entire page (Google Calendar).
• Sleek and Simplified appearance.
  

this question begs the question that yedda should first submit all questions to wikipedia before validation.. anyway:

http://en.wikipedia.org/wiki/Web_2.0

The phrase Web 2.0 was coined by O'Reilly Media to refer to a supposed second generation of Internet-based services that let people collaborate and share information online in a new way—such as social networking sites, wikis, communication tools, and folksonomies. O'Reilly Media, in collaboration with MediaLive International, used the phrase as a title for a series of conferences and since then it has become a popular, if ill-defined and often criticized, buzzword amongst the technical and marketing communities.

My understanding is that Web 2.0 is a website which is an interactive application instead of Web 1.0 which was just static webpages.

So basically any application on the internet which uses database and interactive applications to provide a customized experience for the user.

a technology bubble.

No, that's not correct.  If that were the definition, Web 2.0 would have started back in 1995.