I think Web 2.0 can be defined as a further developed and advanced version of what the internet originated from, which would be Web 1.0.
What are the benefits?
It would appear there are many benefits, which were depicted in the initial brainstorming session by Tim O'Reilly at the Web 2.0 Conference (http://www.web2con.com/) as stated below -

Which format do you think you would like better and why?
I think there will be many versions of the Web to come. We need to adapt to new technology and developing trends to further progress. I like Web 2.0 because it is more advanced than Web 1.0.