A Java program which can be distributed as an attachment in a World-Wide Web document and executed by a Java-enabled web browser such as Sun's HotJava, Netscape Navigator version 2.0, or Internet Explorer.
Navigator severely restricts the applet's file system and network access in order to prevent accidental or deliberate security violations. Full Java applications, which run outside of the browser, do not have these restrictions.
Despite Java's aim to be a "write once, run anywhere" language, the difficulty of accomodating the variety of browsers in use on the Internet has led many to abandon client-side processing in favour of server-side Java programs for which the term servlet was coined.
Merriam Webster "Collegiate Edition" gives a 1990 definition: a short application program especially for performing a simple specific task.