From LXF Wiki
An insecure method of remotely logging in to a server or other network computer.
As passwords are transmitted as clear text, it is eminently hackable, and usually eschewed in favour of SSH. That said, Telnet is still the fastest way to debug your web server (or mail server, etc) in times of need.
Windows Convert Explanation
Telnet is a command prompt program that allows you to use a remote computer running a Telnet server. Once you have connected and logged in, anything you type will be as if you typed it at the computer.
This allows remote computers to be administered without having to leave the comfort of your laptop.