The X Window System was developed at MIT in the late 1980s, rapidly becoming the industry standard windowing system for Unix graphics workstations. The software is freely available, very versatile, and is suitable for a wide range of hardware platforms. Any X environment consists of two distinct parts, the X server and one or more X clients. It is important to realise the distinction between the server and the client. The server controls the display directly and is responsible for all input/output via the keyboard, mouse or display. The clients, on the other hand, do not access the screen directly - they communicate with the server, which handles all input and output. It is the clients which do the "real" computing work - running applications or whatever. The clients communicate with the server, causing the server to open one or more windows to handle input and output for that client.
In short, the X Window System allows a user to log in into a remote machine, execute a process (for example, open a web browser) and have the output displayed on his own machine. Because the process is actually being executed on the remote system, very little CPU power is needed in the local one. Indeed, computers exist whose primary purpose is to act as pure X servers. Such systems are called X terminals.
Here you can find more information about the X window System.
A free port of the X Window System exists for Linux and can be found at: http://www.xfree86.org/
If you would want to use telnetto display graphical applications running on a remote machine, you first need to give the remote machine access to your display (to your X server) using the xhostcommand.
By typing a command similar to the one below in a terminal window on your local machine:
xhost +remote.machine.com
After that, connect to the remote host and tell it to display graphics on the local machine by setting the environment variable DISPLAY:
export DISPLAY="local.host.com:0.0"
After completing this step, any application started in this terminal window will be displayed on your local desktop, using remote resources for computing, but your local graphical resources (your X server) for displaying the application.
This procedure assumes that you have some sort of X server (XFree86, X.org, Exceed, Cygwin) already set up on the machine where you want to display images. The architecture and operating system of the client machine are not important as long as they allow you to run an X server on it.
Mind that displaying a terminal window from the remote machine is also considered to be a display of an image.