Well Android is based on Linux, so the terminal allows you to type Linux shell commands. There are too many of those to type a list, and you can find lists and tutorials on the web, but if there were specific things you wanted then we might be able to answer.
Out of the box Android only supports a limited subset of commands, but if you install something called busybox (there are some no-root installers in the Play Store) you can use most commands.