Microsoft Knowledge Base Article 306626 contains the following summary:
Terminal Services provides remote computers access to Windows-based programs that are running on the server. Microsoft Windows 2000 Server and Microsoft Windows 2000 Advanced Server includes Terminal Services Client Software to support 16 and 32-bit Windows-based clients. In remote administration mode, Terminal Services provides access to physically or logically distant servers. In Application Server mode, Terminal Services provides a multisession environment for server-side computing. This step by step article describes how to install Terminal Services using the Application Server mode.