FAQ
Telnet is a network protocol and is commonly used to refer to an application that uses that protocol. The application is used to connect to remote computers, usually via tcp port 23. Most often, you will be telneting to a unix like server system or perhaps a simple network device such as a switch. For example, you might "telnet in from home to check your mail at school". In doing so, you would be using your telnet application to connect from your computer to one of your school's servers. Once you established your connection, you would then log in with your account information and execute commands remotely on that computer. The commands you use such as "ls, cd, pine, elm, talk, rm" are operating system commands, and not telnet commands.
In most remote access situations, telnet has been replaced by ssh for improved security across untrusted networks. However, telnet continues to be used for remote access today and remains a solid network troubleshooting tool as well. You can find more good information on telnet at wikipedia.