How can a game be 2.5D?

2.5D usually refers to "gameplay in an otherwise three-dimensional video game that is restricted to a two-dimensional plane."

It can also refer to the viewpoint the player has. Such as an isometric-type view on a 3D world.

Wiki - 2.5D

The original 2.5D game was DOOM. They called it 2.5D because it did feature all three dimensions (length, width, and height), and allowed map makers to create maps that made prominent use of the third dimension, but it still wasn't true 3D in two important senses.

First, sectors (i.e., rooms) could not be placed on top of other sectors, so the overall layout remained a strictly 2D diagram that allowed different sector heights. And second, the DOOM renderer was not a true 3D renderer; it was highly optimized for 2D plus heights but could not have rendered true, arbitrary, 3D geometry unlike Quake.

Orthogonal-view games like Diablo are "2.5D":

2.5D can refer to a few things:

• A game which has fundamentally two-dimensional gameplay but features a 3D presentation (see Shadow Complex).
• A game which has fundamentally three-dimensional gameplay but features a 2D or partially 2D presentation (see Duke Nukem 3D).

There's also a very uncommon, loose definition:

• A game which has not-quite two-dimensional or three-dimensional gameplay and/or presentation. For example, I believe Starcraft has an internal concept of "high ground" even though it has a 2D presentation. Or, something like Little Big Planet which is really just three 2D planes stacked together.