Bitcoin Layer 2 is a platform-based Blockchain built on the Bitcoin network using various technologies to validate and reach consensus on transactions by miners on the network. This allows it to inherit the security and decentralization from the Bitcoin network.

The difference here is that while Layer 2 platforms on Ethereum focus on solving scalability issues, Layer 2 solutions on Bitcoin address two problems: Smart Contracts and scalability.

Bitcoin Layer 2 can be divided into two types:

Layer 2 solutions focusing on scalability.
Layer 2 solutions focusing on supporting smart contracts.