Internet TV is the transmitting of television content via the Internet. In other words programs that you traditional watch on a TV are made available on the Internet and can be watched on your laptop/PC/Smartphone.
Internet tv allows users to select the content they want to watch and gives them the flexibility of having TV content that they can pause, replay and control.
Because of the popularity of Internet TV there is a growing demand to watch Internet TV on the TV screen and not on the PC/laptop.
The obviously require that the TV be connected either directly or indirectly to the Internet.
Although TVs with built in Internet connectivity are not yet mainstream it is expected that newer TVs shipped in 2012 will be internet enabled.
Is 2012 the Year for Internet TV
In the meantime you will need to use an external box (blueray player, computer etc) to connect to the internet and then connect that to your TV.
Bring the Web to your Living Room
What does it look Like?
This Google video gives a good overview of what you can expect from your TV set in the coming years.