A thumbnail (in web graphics sense) is a small version of a picture file. Typical maximum sizes range from 75x75 to 150x150 pixels.
Thumbnails are used as a link to the actual image file. Often, information about the image file are provided near the thumbnail (real image size in pixels and file size in human-readable format). This is to help people with modems to judge what to download in full.
A typical mistake with thumbnails is to use construction similar to following:
<a href="bigimage.jpg">
<img src="bigimage.jpg"
alt="[Thumbnail]"
width="75" height="75" /></a>
<br />
Click on image to get a bigger version
This is wrong because the whole point of thumbnails is to provide quickly-downloading previews. This kind of construct will download every file referenced in full.
The correct way is to generate a thumbnail file separately. Here's an example for ImageMagick:
convert bigimage.jpg -geometry 75x75 bigimage_thn.jpg
and then include the image to HTML with construct like this:
<a href="bigimage.jpg">
<img src="bigimage_thn.jpg"
alt="[Thumbnail]"
width="75" height="75" /></a>
<br />
Click on image to get a bigger version
ImageMagick, as mentioned above, is a highly cool tool for thumbnail creation, because it allows mass conversions.