Quite simply, the Sweet Spot (or to abbreviate for Sweet Spot Training, SST) is that rather large span of power output from upper L2 through to roughly, Functional Threshold power. This term was coined by Frank Overton, a man I've never met, but from his website http://www.fascatcoaching.com/, I would bet we'd see eye to eye on most discussions relating to endurance training. The graph above, which I lifted from Frank's site, was actually created by Andrew Coggan.
There is nothing revolutionary here. Good coaches like run guru Arthur Lydiard recognized many years ago (simmer down, I know that recognition of this phenomena likely predated him by 1000 years) there is a range of effort when training for endurance sports which maximizes 'bang for the buck' because it is hard enough to cause the most desireable adaptations but, not so hard that it causes excess fatigue, requiring extended recovery. This is THE key concept. You can train more at this level, which makes you better, without having to train 20-30 hrs/week. I think this was depicted beautifully in the graph by Dr. Coggan.
The reason it is SO sweet is because by increasing intensity from say 60-65% of functional threshold (typically where athletes self select for their endurance rides) to an effort most would describe as 'steady' to 'comfortably' hard, roughly 75-85% of FTP and doing so for up to about 3 hrs. instead of 5 or 6, an athlete can elicit greater gains in the key components which lead to greater endurance performance, namely increased mitochondrial enzymes, increased lactate threshold and increased glycogen storage and do so in less time. In other words, concentrate a little harder, but not too hard and get a lot better...good deal.
So why not just go as hard as you can then, say L5 or higher as much as possible and then just take a few days off or easy? Well, while this certainly works to improve the aforementioned components of fitness, but it doesn't do as effective a job of increasing the body's ability to store muscle glycogen or to convert type IIB to type IIA as SST does, which for a relatively new athlete is a key determinant of getting better 'endurance'. Plus, training in L5 and higher is really mentally tough!
SST works for all endurance sports and specifically, for all endurance cyclists...that's from 4km pursuitists to Ironman athletes. For the former, as much as 60% of energy produced during this short race is aerobic. For the latter, not only is it aerobic, but lower SST IS Ironman effort, or slightly harder for some. What could be more specific than that?