The application could ONLY exist on the net, and draws its essential power from the network and the connections it makes possible between people or applications. These are applications that harness network effects to get better the more people use them. EBay, craigslist, Wikipedia, del.icio.us, Skype, (and yes, Dodgeball) meet this test. They are fundamentally driven by shared online activity. The web itself has this character, which Google and other search engines have then leveraged. (You can search on the desktop, but without link activity, many of the techniques that make web search work so well are not available to you.) And search applications like Adsense for Content clearly have Web 2.0 at their heart… In the hierarchy of web 2.0 applications, the highest level is to embrace the network, to understand what creates network effects, and then to harness them in everything you do.

see Levels of the Game: The Hierarchy of Web 2.0 Applications