Thumbnail is a term used by graphic designers and photographers for a small image representation of a larger image, usually intended to make it easier and faster to look at or manage a group of larger images. For example, software that lets you manage a number of images often provides a miniaturized version of each image so that you don't have to remember the file name of each image. A thumbnail is also used to mean a small and approximate version of an image or a brochure layout as a preliminary design step. Adobe's Acrobat viewer lets you show a sequence of thumbnails of viewable pages as a way to navigate among the pages in a document. Adobe's Photoshop lets you view a thumbnail version of certain kinds of images.
Web sites with many pictures, such as online stores with visual catalogs, often provide thumbnail images instead of larger images to make the page download faster. The user controls which images need to be seen in full size.
The term probably springs from the idea of "a picture the size of your thumbnail."