Whats the difference between 2-way and 3-way speakers when it come to car speakers and which is better?

Three way speakers are the best. Two ways don't have a speaker for midrange so you lose a lot of sound. Not much difference in the price but if you go to a store like Canadian Tire or Walmart & use their speaker board to compare the speakers you'll notice much better sound from the three way speakers.

This refers to the number of individual speakers reproducing various frequencies of sound on a single channel. In car audio, this can be in the form of separates which include a crossover network for high end sound applications, or for more budget minded applications, one-way (a single midrange or woofer speaker), two-way (aka coaxial composed of a woofer and tweeter) or three-way (aka triaxial composed of woofer midrange and tweeter). This simply means the smaller speakers (midrange and tweeter) that reproduce the higher frequencies such as symbols are mounted to the larger speaker (woofer) which produces the majority of the tones (vocals, percussion,...). I would not shop based on this specification, as a woofer and tweeter (two-way, coaxial) does a great job covering the sound spectrum, and the three-ways are usually overly bright sounding since they have a woofer and midrange producing the frequences the human ear is already more sensitive to hear. I would base my decision on how much power you will have to supply to your speakers, and select the largest units you can fit within the available space, as they reproduce lower bass frequencies much more accurately and give you slightly more volume. When shopping, I always closed my eyes, centered myself between the demo speakers, and listened to familiar music to decided what I wanted, disregarding brand name and cosmetics.

A 2-way speaker usually consist of seperate components a woofer and tweeter whereas a 3-way speaker usually has the woofer, midrange and tweeter all on the same unit.