A two way peg is a second layer transaction system, where new tokens are created when bitcoin is locked up on the base layer, and those bitcoin can only be spend, if those second layer tokens are destroyed.

That's the original vision of Blockstreams early side chain research, and it took 10+ years to finally have a trustless way to get Bitcoin from the side chain to the baselayer.

What enables this magic is succinct zero knowledge proofs which are verified on the base layer in order to unlock the Bitcoin. With BitVM the zk proofs can be emulated on bitcoin today.