Ajit makes some adjustments to Tim Reilly's talk and says Web 2.0 is the harnessing of collective (people) intelligence to drive the web as a toolset and platform for distributed software, applications, communities and metadata.
This reminds me of when I said in 2005 that Web 2.0 is about the user (yep, here's what I wrote) :

"While RSS is an amazing tool, to me the heart of Web 2.0 is the user.
The enduring lesson of all of the social media and emerging technologies is that we've created an a la carte, do it yourself platform where users can engage with sophisticated forms of search, feeds, metadata and APIs, social networks and identity, and commerce and fill these vessels with their own information

--And that's the heart of the revolution, IMHO.
The tools power it, but the people do it."

(Via Alex Barnett)