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What is a Java Applet?

I still don't understand what a Java Applet is and what it's used for? Would you explain a bit more in layman's terms?
A Java applet is a Java application built to execute within the Java applet framework. The applet framework provides a very restricted "sandbox" in which the applet will run. The framework restricts such things as writing to the user's file-system, accessing servers outside of the applets context, etc. The applet framework mandates that the applet implement a few coarse-grained, lifecycle, callback methods (init, start, stop, and destroy) in order for the applet to perform in a well-behaved manner when running in a Web browser.

Here is an example of a simple applet:

import java.applet.*;
import java.awt.*;
public class HelloWorldApplet extends Applet
   public void init()
      // Called once when the applet is created.
   public void start()
      // Called whenever the applet's container (browser page)
      // gains the focus.
   public void stop()
      // Called whenever the applet's container (browser page)
      // loses the focus.
   public void destroy()
      // Called once just prior to the applet being destroyed.
   public void paint(Graphics g)
      // Called whenever the applet needs to repaint.
      g.drawString("Hello world!", 4, 50);

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