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Programs execute on the host computer but the results display on the terminal screen.
In the days of mainframes from the mid 1970's to the mid 1980's, most people used terminals to communicate with computers. They typed in programs, ran programs, wrote documents, issued printing commands, etc. It was called a terminal since it was located at the terminal end of this cable. A real terminal is different from a monitor because it's a different electronic setup. A text terminal is often connected to a serial port of the computer via a long cable.