Surprising, most people only saw IE2 when it was bundled with Windows 95. You only saw IE1 if you bought the Win95 Plus! Pack.
Rather oddly, if you went to Help/About in IE1 it actually reported itself as version 4.4! Also, IE1 and 2 only seemed to be available in 32 bit versions that only ran on Windows 95. NT 3.51 couldn't run it, and NT4 had it's own special build of IE2 (it specifically had 'Internet Explorer for Windows NT' in the about box, rather than the same build as 95. I've only seen 16 bit versions from IE3 onwards, creating the odd paradox of older versions only running on newer operating systems and needing to wait for a newer version to run on older operating systems!
Internet Explorer 2 was a radical improvement over IE1, while IE3 introduced us to the layout we all know, which would stick until IE7 was released twelve years later.
What was the radical improvement with IE2? It looked exactly the same and appeared to have much the same functionality. Indeed, I've often wondered quite what *is* different between the two versions.
When IE4 came out in 1997 the active desktop feature was ahead of its time, it worked best with the-then broadband equivalent of the time. IE5, 5.5 and 6 upped web support standards and not a lot else. Internet Explorer then went on hiatus for six years.
I agree that IE4 was a bit ahead of it's time, most people simply didn't have connections good enough to exploit the kind of content which it supported. Which is probably why it's still useable today. I liked all the little things which active desktop added - like being able to use a JPEG file as a desktop backdrop natively; before then you could only use a BMP file. Indeed, even with IE7 choosing the 'set as background' option when right clicking a picture creates a BMP file for display rather than just using the file as is even though it hasn't needed to do for years; the way that feature works has never changed.