Telnet allows you to connect you over TCP/IP Ethernet to devices (computers, routers, ...) using a console. Telenet is considered as not save since it does not use encryption but has the advantage to be simple. To be save, use ssh whenever possible instead of telnet. Telnet is a client server protocol.
Emerge a server daemon and a client
emerge netkit-telnetd
Type in man telnetd to find out whats about.
Usually telnetd does not start manually except for debugging so: telnetd -debug
then make some tests.
Or do it right from the beginning by using xinetd.
Do not login as root since this might be disabled. Login as user than su. The user must have permission for su, if not add him to the wheel group and check the sudo configuration.
If login fails e.g. 3 times or after terminating telnet the telnetd exits to avoid disasters since telnet is not well protected against evil hackers.