I once asked the students in an e-commerce course I was teaching to write reports on their favorite entertainment sites. One of them chose http://www.google.com/. I said, "That's not an entertainment site. It's a search engine." She replied, "It's entertaining to me!"
It was then that I realized that entertainment on the Web is whatever one says it is. And because the medium is by nature interactive, that may well be something that had not previously been considered entertainment.
While some of the following are admittedly a little offbeat (as is the writer), my own personal favorites include these:
http://www.kartoo.com/: A graphical search engine
http://kmgi.com/: Animated ads
http://www.cartoonbank.com/: A database of cartoons and covers from The New Yorker magazine
http://www.theonion.com/: Intelligent satire
http://www.moviecliches.com/: A list of the most annoying and common logic flaws and stereotypes found in movies
http://www.cyberstuff.net/: "Useful Stuff for the Rest of Us"
http://www.tackymail.com/: The Tacky Postcard Archive
http://www.expa.hvu.nl/ajvdhek/: The First Virtual Mousepad Museum
http://www.findagrave.com/: The graves of thousands of famous people from around the world
http://users.efortress.com/doc-rock/deadrock.html: The Dead Rock Stars Club
Of course, the best use of interactive entertainment is online games. The Internet is the medium that was "made" for gaming. Massive multiplayer online games such as EverQuest, The Sims Online, Star Wars Galaxies, World War II Online, and many more have a devoted, worldwide following of people who pay to participate in the creation and growth of these virtual worlds. This area of e-commerce doesn't get much press, but it has been a consistent money maker, with every sign of continued growth.