xterm is the standard terminal emulator for the X Window System. It allows users to run programs which require a command-line interface.
If no particular program is specified, xterm runs the user's shell. An X display can show one or more user's xterm windows output at the same time. Each xterm window is a separate process, but all share the same keyboard, taking turns as each xterm process acquires focus. Normally focus switches between X applications as the user moves the pointer (e.g., a mouse cursor) about the screen, but xterm provides options to grab focus (the Secure Keyboard feature) as well as accept input events sent without using the keyboard (the Allow SendEvents feature). Those options have limitations, as discussed in the xterm manual.