Just means that there are two actors in the frame -- most times, if they are facing each other, then it's a profile shot so you can see both faces (as opposed to an over-the-shoulder shot, which technically has two actors in it but is not called a two-shot.) Or maybe the two actors are standing side-by-side. Often it is by necessity a medium shot, although it's possible in a widescreen format like 'scope to get a tight shot of two people standing next to each other.
There isn't a precise definition really. Usually the term is used when you have more than two actors in the scene but you want a shot that isolates two of them in the frame when starting the coverage.
