MT is multi-tasking (though some people use the term to discuss multi-threading --which is a sub-set of multi-tasking) - it is when the computer pretend do more than one thing at one time. Computers can only do one thing at a time, but if they switch what they are doing, back and forth among multiple applications, they appear to be doing multiple things at once - that is multi-tasking.
There are a few forms of MT -
The different forms of multi-tasking each have their advantages and disadvantages. Throughout this discussion remember that Macs was the first mainstream personal computer to have Multi-Tasking of applications (via desk-accessories).
Advantages and disadvantages of each approach -
Almost all implementations of tasking have some form of "hybrids" - there are few "pure" tasking models as computers have to share devices, Memory and shared resources - so to some degree the code must "cooperate" (although, usually the system will handle that cooperation for you).
Cooperative multi-tasking has the advantage of allowing the Application to decide how much time to give to other applications. In well written apps this is often better than PMT. However, in poorly written Apps - this allows an application to be a pig and not share well. (Gets a note sent home to Mommy reading - "does not play well with others"). So cooperative multi-tasking is much more a slave to the worst written App the system is running. Since Windows seemed to have some of the worst written apps out there - Win3.1's and Win95's (with 16 bit apps) cooperative multi-tasking definitely did not work well at all ( Mac apps behave far better). It was this "low quality" issue with Windows Software that drove MS into improving their tasking model before Apple had to do the same - but there are definitely reasons for going there.
Preemptive multi-tasking has the advantage of finer
granularity. The system is constantly ripping control away
from one app and giving control to another - then yanking
control away again. This means that all application get a
smaller amount of time - but much more frequently. So things
progress more evenly. But this frequent changing of control
can, in some cases, cause a loss of overall efficiency -
although overall it usually increases it. The disadvantage
is that Applications are often not given as much control
over the scheduling, so sometimes they will have control
yanked away from them when they don't want it. (Try running
a real-time graphics intensive game under Windows with
something else running in the background to see these
results). There are also other more subtle issues with
resources and real time events that can cause problems - but
those problems have to be solved by System code writers, and
so Application code-writers don't care.
More important than the conceptual design is the actual implementation of each.
Almost all systems have preemption at the driver level (the software that talks to the Hardware). When a hardware device needs to be serviced it preempts everything else. (This is the same for Macs and PC's).
There are Low-Level tasks and high level tasks - many systems also have preemption on the low-level tasks (like the Mac). If an application tries to steal all the time and does not share - it does not matter (in most cases) because the Mac has low-level services still running preemptively. Even with an application "not cooperating" - the low level threads often continue to work (for example the system will continue to play music, finish a download, and you can "force quit" the bad app).
So when people are discussing multi-tasking, they are usually discussing it at a higher level or Application level. When I write an application do I have to give up time, or will it be taken from me.
Correcting some misunderstandings - There are some misunderstandings about PMT and CMT out there. Basically many do not understand what they are or how they are implemented, and so make some bad assumptions (reporters seem to be the worst when it comes to misinformation).
Users do not care what form of tasking is going on - what they care about it how well it actually works in their "real-world". On the Mac multi-tasking was working before the same could be said of Windows, and it was working much better. Mac users have had the advantage of this added productivity for 10+ years, and it has only been getting better with each subsequent release of the OS - and it looks to continue to do so.
MS has made a partial jump ahead of the Macs scheduling with Win95. But it only works some of the time, and there are many other flaws that prevent it from working nearly as well as it should - and in many cases it doesn't work as well as the Macs scheduling. Most of this can be blamed on bad applications - but much also is the fault of weak-system design and implementation. Users of Windows only think they have the cat's meow in schedulers, and they are usually pressing the acronym war with "my machines got PMT, nyha, nyha, nyha". Users of both machines are usually much more pragmatic (realistic) and realize that bad PMT (or good PMT with bad applications) is not better than what the Mac has - which is multi-tasking that works, and works well.