To see what Friedman means, we can simply look at the beginning of the book. On page 8 in the hard cover edition of the book, Friedman tells us that he came to realize that
The global competitive playing field was being leveled. The world was being flattened.
From this, we can see that a "flat" world is one in which the "playing field" on which companies compete has become level. It is one in which companies from various countries can compete with one another on an equal basis.
Friedman says that what has really driven this is what he calls "Globalization 3.0." This is globalization that is caused by computer software. The internet, he says, is the big leveller that has made it possible for companies in India, for example, to compete with those in the US.
So, when Friedman says the world is flat, he is saying that technology has allowed companies from more and more countries of the world to compete on an equal basis in the global economy.
Thank you so much=D