More simply, Web 2.0 is about the shift from network search economies, which realize mild exponential gains - your utility is bounded by the number of things (people, etc) you can find on the network - to network coordination economies, which realize combinatorial gains: your utility is bounded by the number of things (transactions, etc) you can do on the network.
The point is that this shift is combinatorial - each person can do X activities in a combinatorial network, and it's combinations of these activities that make value explode. Contrast with a exponential network, where it's the number of people on a network that create value. That is, a relationship between any two people is 1:1 in an exponential network, but many to many in a combinatorial network. It should be intuitive to you that the former kind of network has more potential for value creation.