A terminal is something like a DEC model Vt220, or IBM 3270. These are physical machines with a keyboard, and a display. Most often the display was a CRT, but some were just a printer, I supposed some must have had a LCD but I've never seen one. A few did have a mouse, but that was rare. They might look like a computer, but they do not have a CPU (or they do but the CPU is very under powered). The point is you can have 100 cheap (cheap as in 4x the cost of a modern PC, without factoring in inflation) terminals connecting to an expensive powerful computer (expensive as in millions of not inflation adjusted dollars, powerful as in a modern smart phone is faster by nearly any measure). Every terminal had some special commands that programs could use to do something more fancy than plain text, but different ones had different abilities.

These days a powerful PC is cheaper than any terminal could be and vastly more powerful than those old computers, so it doesn't make sense to have one except as a collectors item. However terminals themselves did leave a useful of program design. Most command line programs know how to control a terminal to do some pretty printing. Thus we often use terminal emulators which let our computer pretend to be one of those old terminals. The DEC vt100 for whatever reason ends up being the most commonly emulated terminal when someone says terminal emulator - there really was a model vt100 terminal at one time.

Note that a web browser counts as a terminal emulator by the above definition. Nobody thinks of them that way, but they fit.