Use applets for small plug-in style applications or plugins. This tag should not be used for fully fledged applications.
Applets are "small applications". They differ from "real applications" in the fact that they normally are embedded in a narrow environment in which and only in which they can function, implementing a very limited functionality.
A typical example of an applet is a plug-in in a web browser. Out side the web browser the program can not function, and inside it it usually offers limited additional functionality (while the actual web browser remains the main program and the focus of the users attention).
The term is frequently used to refer to a Java applet.