1- A dedicated server is: Player X owns/rents/buys a PC or a dedicated corporation's server to run a dedicated version of the game application to welcome players Y, Z, etc. The PC runs the game application 24/7, regardless of the number of players on it. It does not render the game to any player as it is dedicated. It's an open server in the way it's under the total control of its host, i.e. he can use commands to modify a WIDE range of settings, control access to anyone through boots and bans, can run mods, etc. Low gravity anyone?
2- What most people think of when they hear "no dedicated server" is this: Player X runs the game application on its PC and it BOTH renders the game and hosts/processes the other players' signal. That's an old way of doing and is outdated because it is completely decentralized (it's a local server), thus promoting lag, host advantages (no lag whatsoever), etc.
What I think Activision/IW is doing by saying "no dedicated server" is actually a little bit of both. Let's see it that way:
3- Through MW2's game browser, players can decide to join games created by other players or host them themselves. They DON'T HOST IT on their own PC, instead, they simply send a hosting request to Activision, IW, or whoever servers are used to virtually create a game room that will be remotely "hosted" by the given player, (hopefully) granting him a restricted access to the game's options of inviting/kicking/banning other players, selecting the map, the game type, etc. Think of it as a remote admin that has limited control over the game's server. Once the hosts and/or all the players leave the game session, the game room "disappears", as it was only temporarily created. Everything goes in and out of Activision's servers. You probably won't have a good ping like you would have in the past by playing on servers that was hosted in your city (