I've used this definition before, and as I apply for the Google Scholarship for the Personal Democracy Forum, I'm using it again. Web 2.0, to me, is about:
"Lowering barriers to mattering."
YouTube, Blogs --> Lowered the barriers called Media Networks, so YOU could matter in the media (i.e. your 15 seconds or your scoop). MoveOn.org, One.org --> Lowered the barriers called Lobbyist Networks (By the way, MoveOn is Social Media!), so that YOU could matter in politics. Wikipedia --> Lowered the barriers held up by Encyclopedia Publishers, so that YOU could define history. Webware --> Lowered the the barriers called Software Distributors, so that YOUR product could be in the hands of millions. Kiva --> Lowered the Wall to microlending held up by Wall Street so that you could lend money, make money, and make a difference. Etc. --> Etc.
Lastly, what's great about this definition is that it provides direction for work in the Internet space. If you see a barrier anywhere in life, there is value to be extracted by lowering that barrier using the tools available on the net. I still think there's a ways to go to engage people politically using the net. Washington still has a barrier around it, and that barrier can still be lowered so that everyone matters more.