Telnet is a standard Internet protocol for accessing other machines across a network or the Internet itself (more commonly). It is not always the most secure and is often replaced by SSH, for example, but players on MUSHes make use of telnet to connect to the games.
Raw telnet through Windows is often very limiting to players only allowing a handful of lines of text to be sent. Typos are difficult to fix in raw telnet, as well, and the interface looks messy. Most players upgrade to a MU* client which offers nicer-looking, more user-friendly interfaces that allows a greater amount of text to be sent to the game, editing typos before sending, and sometimes has built in features which directly interact with the games (such as a mail interface).