what does "thumbnails " mean and their purposes in computer jargon?

In general a thumbnail is just a reduced size image used for display purposes.

In Photos, large images can take a long time to process, so rather than processing each image every time to make a small image for the window view, a small jpeg is created once and stashed so that the view can be created quickly. That small image is called a "thumbnail".

A lot of these questions can be answered by checking Wikipedia, first:

https://en.wikipedia.org/wiki/Thumbnail

Highlight the word and control-click (alternate-click) on the word Thumbnail gets the popup:

Then selecting Look Up "thumbnail" from the pop-up gets information from the macOS dictionaries:

Launching Dictionary app from the Applications folder (or from Spotlight) and entering the word or jargon there also gets the definition.

Above sequence is described here: Look up words on Mac - Apple Support

How to use the Dictionary app is here: Dictionary User Guide for Mac - Apple Support

Thumbnails are considered smaller versions of pictures, so that you can visualize many of them at once before choosing a specific one to examine in full size.