It is a digital representation of a physical asset that identifies and stores a set of attributes that define that asset’s state.
These may be measured via sensors or other means. The Digital Twin itself resides in the cloud and communicates with the asset. It can show the current or past states of the asset —- and ideally it can point to the future and simulate the future state based on certain assumptions. It also connects with the asset history and the Digital Thread.
You may also hear of the Asset Administration Shell (AAS), which is a standards-based model to allow you to implement the digital twin. I am not sure how wide-spread it is. The initiative Industrie 4.0 has published some standards on this.
The Digital Thread begins with the design of a product and follows the product through every step of its life, from design, to manufacturing, to sale, delivery, maintenance and disposal. It links to every system that it touches during the journey (CAD, PDM, PLM, MES, ERP, CRM, MOM, etc.) and combines the data to provide a complete “history of everything” for the asset.