a thin client is basically a cut down PC. it has very low processing power, a small ammount of memory, no hard drive etc. etc.
theyre designed to just basically boot windows and load some very easy applications like Internet explorer, citrix, remote desktop/terminal server etc.
theyre most useful in environments like this where you want a public access internet terminal, or in organisations which use a pure citrix/terminal server environment. you invest a lot of money in the servers and then buy these cheap and easy to maintain thin clients
we bought a load then realised that the app they needed to run (a CRM web app) was mega CPU intensive and queries took 1min +

so ripped em all out and replaced with desktops in 1 week

since we'd opened em up we couldnt send em back