A dumb terminal is a very simple monitor with very little processing power and features. It does not have the ability to process escape sequences such as clearing a line, clearing the screen or controlling the cursor position.
It is dubbed as a glass Teletype as it has the same limited functionality of one. It is usually paired with a keyboard and sometimes a mouse to allow the user to input commands and data.
Dumb terminals are called such because they had very little processing power, as they simply process a limited number of display commands. No programs can be run on these devices at all. Instead, the dumb terminal sends the user inputs to a computer that runs the needed programs which then sends the results to the terminal for display.
Most dumb terminals were made to run with the FreeBSD operating system and were in wide use in the 1970s up to the early 1980s because of the relatively large costs of computers. Organizations often had only very few computers in relation to the number of users, so they needed these cheap dumb terminals to allow multiple users to access the few more powerful computers.
Because of newer manufacturing methods, computers and monitor technology became more powerful and cheaper to make, leading to the the dumb terminal becoming obsolete both in function and concept.
The smart terminal and the thin client are modern versions of the dumb terminal at least in concept, both of these are able to do some processing locally but are both connected to a more powerful computer such as a server.
The best examples of smart terminals are the ATM machine and a point-of-sale machine. Thin clients, on the other hand, are software applications and are only analogous to terminals in function since they serve as the user interface to connect to a more powerful computer.