Ace2 is, as the author explains, a backend element for WoW UI creation. It's specifically a set of libraries that mod authors can use to increase portability and compatibility between their creations and the work of others. The Ace Wiki has further explanations on the benefits of using Ace2 (if you're a mod author) as well as a comprehensive listing of Ace mods for us consumer/players.
Xerin further highlights a few mods well worth using (like FuBar and Cartographer), and offers a few more reasons why you should consider Ace mods the next time you restart your UI from default. I am a huge fan of both of those. I've also gotten quite a lot of use out of the Ace version of ScrollingCombatText, Decursive, and Ratingbuster.
What about you, Massively? Any mods (Ace or otherwise) you can't live without?