It's similar to remote desktop, but it creates a whole new desktop for you to connect to. It's useful for having centralized management of certain programs, or to have programs available to slower computers that normally couldn't run them.
Terminal Services are offered by Windows 2000 Server / Advanced Server and I assume Data Center as well. 2003 also has terminal services. Since you're running 2k pro you could only be a client to a server.
You can also set up an XP Pro workstation for a single connection as well. It talks on port 3389 so if you forward that port through your router to an inside IP you can connect to NAT'd machines inside a firewall too.