Definition
Web 2.0 is a concept popularized by O’Reilly Media around 2004 for the phase of the web marked by user-generated content, participatory communities, and websites acting as platforms.
How it works
Pages turned from static documents into read-and-write platforms: users publish on blogs, wikis and social networks, sites expose APIs for third parties to combine data, and RSS feeds and tags let information be aggregated and reorganized.
Usage
Products driven by participation—blogs, Wikipedia, social networks and video communities—are all built on the Web 2.0 idea.
Related and confusable terms
Web 2.0 describes a shift in how the web is used and what products look like, not a specific technology; open APIs were one of its common implementation tools, but one names an era and an idea while the other names an interface technique.