Selenium 1 included Selenium RC, Selenium IDE & Selenium Grid.
Selenium 2 include Selenium WebDriver, Selenium IDE & Selenium Grid.
WebDriver was basically a replacement to RC. Most of the testing challenges were overcome with WebDriver from v2. Most notably, the overcoming of Same origin policy issue. This made WebDriver tests faster and easier. Hence the use. For more details, refer to SeleniumHQ's documentation as this is not the right forum to post the detailed differences.
You may also read this blog to understand the differences: https://www.edureka.co/blog/selenium-tutorial