I'm pretty sure he referring to the use of Web 2.0's as a first tier of backlinks.
As for the OP, treat these Web 2.0's like you would your money site. I.e. Fresh, unique content.
Content is king, so dont waste your time on spun or crappy content.
2% keyword density should be fine, try and squeeze in a couple of LSI keywords too, it will help dramatically. You can be a little less cautious when backlinking to your first tier, however you should still try to avoid masses of spammy backlinks. It may not have a direct effect on your money site, but if it tanks your Web 2.0 profiles then all of a sudden you will lose all your backlinks.
Also as mentioned by someone earlier in the thread, place a few outbound links to authority sites, the big G likes this a lot, it forms some sort of trust rating for your website. Wiki-pedia is a great source.
Don't forget images and videos to make the profiles look more genuine.