The sequel to Creatures, developed by Cyberlife (now Creature Labs).
A vastly improved GUI, 16-bit graphics (as opposed to 8-bit in the original game), a more complicated genome featuring organs and much more flexible scripting system (CAOS) were some of the many new features.
One of the new 'features' which wasn't felt to be so good (in my opinion, it was rather annoying) was the need to get your Norns to collect power-ups before you could use some of the advanced applets. Tools were quickly produced to help people get around this.
As well as the introduction of a new species - the Ettin - the world was much larger and much more detailed, being prerendered in 3D. The storyline was that a volcano had erupted and the original world had been destroyed, but a lot of the old Shee world was revealed.
Cyberlife did a lot more to help the online community in this game: they provided an Agent Injector with the game, and eventually provided development tools via the CDN.
It was Generally felt to be inferior to the original game by most of the Creatures community, but for no real reason other than that there were a few problems with the AI (such as One Hour Stupidity Syndrome), and that it was much more orientated towards being a game rather than an AI experiment.
Hint: To run without the CD, simply change the shortcut to point to Creatures2.exe and change the command line to 'Creatures2.exe /Embedding'.