Telnet is program with many uses. The most common use it had was to access remote shell accounts on other servers. At Suso we offered telnet access to shell accounts up until 2004, and turned it off in support of the more secure SSH protocol.
Telnet can still be used for other purposes like directly accessing other network ports for diagnosis or to quickly check if a service is working.
For example, you can manually download a website like this:
telnet www.cnn.com 80
It will display something like the following:
Connected to www.cnn.com.
Escape character is '^]'.
At this point you can type in the following to retrive the main webpage from www.cnn.com. Press Enter twice in order to let the web server on the remote end know that you have finished typing in your request:
GET / HTTP/1.0
You will see a lot of HTML code fly by in your shell window, this is the code that makes up CNN's front page. This is essentially a simplified version of what your browser does when you visit a website.
You can use the same method for all other TCP network protocols that don't use encryption.