An App Service Environment v2 is a fully isolated and dedicated environment for securely running Azure App Service apps at high scale, including Web Apps, Mobile Apps, and API Apps. It is essentially a deployment of the Azure App Service into a subnet of your network, so think of it as your private Platform-as-a-Service environment in the cloud.
For more information, see:
- App Service Environment v2 release announcement (blog)
- Introduction to App Service environments (docs)
- App Service (overview)