There are two types of software that let you make a Telnet connection.
Telnet is especially useful if you are dialing in over a modem. You are not sending lots of fancy graphics over the slow connection, so your response time is much faster. Many programs work perfectly well over a VT-100 Telnet connection
There are also many programs (Molecular Modeling) that require a more sophisticated connection, and for that, you need X-Windows
Visit the MacX web site.
However, you cannot use telnet or X windows to transfer files to or from a remote UNIX machine. For that you need ftp.