The thumbnail kioslave is used by KDE for network transparent and persistent generation of thumbnails.
The thumbnail kioslave uses plugins to generate the actual thumbnails. You can enable viewing of these thumbnails from the → submenu, available in Dolphin or in Konqueror in file manager mode.
The thumbnail kioslave is not directly useful to a user, but if you are a developer, you can use it within your own applications to create file previews.
See the documentation in the sources for more information. You will find these in the source folder thumbnail