This question has puzzled me for quite some time. It's so vague and fluffy in the edges. However here is a great article that describes what it is - and I am so relieved that I wasn't completely stupid.
The term is quite fluffy and can be described as "the things a user work with on a local computer". Or to put it more elegantly, as Martin Woodward does, "a container that bridges the gap between your local computer (acting as a TFS client) and the server"
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