xterm is the standard terminal emulator for the X Window System. A user can have many different invocations of xterm running at once on the same display, each of which provides independent input/output for the process running in it (normally the process is a Unix shell).
xterm originated prior to the X Window System. It was originally written as a stand-alone terminal emulator for the VAXStation 100 (VS100) by Mark Vandevoorde, a student of Jim Gettys, in the summer of 1984, when work on X started. It rapidly became clear that it would be more useful as part of X than as a standalone program, so it was retargeted to X. As Gettys tells the story, "part of why xterm's internals are so horrifying is that it was originally intended that a single process be able to drive multiple VS100 displays."