IP 2 stands for In Progress 2. It refers to the starting of second background check of your application, after your AOR and IP 1 respectively.
At IP 2 stage (which mostly happens at your local visa office-LVO) your application gets checked for eligibility, i.e that whether the information provided by you is correct, you meet all the requirements of the stream you are applying for. You have legitimate work experience under the NOC you have claimed. Your CRS score is correctly calculated. Your education documents are in order. They check your background for criminality and security, to determine you are no threat to Canada. They basically at this stage check that each and every information provided by you is correct or not and that whether you have all qualifications and credentials that you have claimed in your application.
The application process in most cases follows this sequence-
AOR (acknowledgement of receipt)----> Medicals Passed---> IP 1 (Background in progress 1, here your application is checked for completeness i.e that you have attached all documents required by CIC correctly or not, also refereed to as R10 check)---> IP 2--->PPR (passport request)---->CoPR
Sometimes, your background check (IP 1) can change before medicals are passed, but over all both IP 1 and medicals go side by side independent of each other.