iTerm is a third party replacement for the built-in Terminal application.
iTerm has several advantages over the built-in Terminal. These include:
- Split pane view
- Hotkey window for instant terminal anywhere
- Search will highlight all found words (like in Chrome and Safari)
- Mouseless copy
- Instant replay (can "rewind" your session in case you forgot to note/copy something)
- Paste history
- Growl support for notification when a process completes
Related question: What is the difference between iTerm2 and Terminal?