3 is implied to be better and replacing 2. I'm not sure if the future we are heading to is actually that way but the name kinda led people to believe it is.
It's essentially supposed to mean the full maturation of P2P solutions that can rival the centralized web. A modern decentralized web, with finance included.
There are plenty of things still missing which make it not mature enough to do so, which are too numerous and esoteric to name. But one example would be "account abstraction" (https://eips.ethereum.org/EIPS/eip-4337) which I believe would enable communities to trustlessly share a single wallet (pooled funds/coins/gas) for various operations related to the service they're using. Doesn't sound like much, but would open up the possibility of some wacky services.
From my perspective, the end goal is to make digital networked vending machines that can't be tampered with. That's pretty cool, and there are already some interesting ones out there like PoolTogether (https://pooltogether.com/). What would normally be considered an obvious scam can actually be built legitimately with web3 tech.
Eventually some very very interesting EIPs will be deployed, and that will drastically change what's possible with "web3" - making it possibly live up to the name.
3 is implied to be better and replacing 2. I'm not sure if the future we are heading to is actually that way but the name kinda led people to believe it is.