My first real experience with user-generated gaming was with a game called "Thief: The Dark Ages." The game, which itself was a fairly incredible one e that created a "stealth fps" genre, released a toolkit with a "Gold" version that allowed users to create new missions for the game. Maps started appearing in online forums, and soon a small community was created sharing and creating new content for the game.
About a year later, two friends used the engine of a game called "Half-Life" to create a modification for online play called "Counter-Strike." It was a minor thing, really. It only became the most played game online for about the next five years. At this moment (as of this writing), there are 145,508 players playing the game, and players in aggregate spend an average of 7.4 billion minutes a month playing (that's over 14,000 years). And this was not the brainchild of a game developer, but rather a project of two guys who got their hands on a development toolkit for another popular game.
About two years after the launch of "Counter-Strike," a game called "Morrowind" was released by a studio called Bethesda. In order to complete what was a massive game, they created an all-in-one tool-set to simplify development - which, upon release of the game, they included in the package. This spawned the largest scale modification community I've ever seen. This tool-set could be used to add new weapons to the retail version of the game experience, create new characters, or even new worlds and plot lines. It was also a significant benefit that the PC version had over the Xbox release.
The game that followed up "Morrowind," called "Oblivion," followed in the path of its predecessor and also released a modification tool-set, which got it in a bit of trouble. Some might remember the "Hot Coffee" debacle with "GTA: San Andreas." In that case, a modification was released that allowed racy game content that existed on the disk but wasn't integrated into the game experience to be playable. In the case of "Oblivion," a modification was developed that remodeled the "skins" being used for the female characters in the game so that, when they weren't wearing the clothes they came equipped with, they appeared to be nude. Despite this not being in any way reflective of the content being distributed on the disk of the game, it was subsequently re-rated in the "Mature" instead of "Teen" category.
While these efforts (and there are many more I haven't mentioned) have largely happened outside the realm of the game, involving the efforts of a development community, there are some indications of this content model being integrated into gameplay. The upcoming game "Spore" is one example, where creatures and civilizations that "evolved" on one player's computer might end up migrating to other players' worlds. Another example, and one indicating a shift in PC exclusivity of UGG is "Little Big Planet" for the PS3, which is betting a great deal on the involvement of the players in building a greater game experience.
We're very much headed into an era of Gaming 2.0.