The original townhouse concept goes back to the English nobility. An English country lord would have a townhouse in the city to be used as a dwelling place during his visits. The British townhouse would be smaller than a normal home and might have a space for the servants too.
In the United States, the row house or Brownstone is the truest form of the townhouse. Most town homes are narrow, multi-story dwellings with their own separate entrances. They usually don't have lawns.
This urban housing unit allows for developers to create higher concentrations of dwellings when there is a limited amount of space. The concept is to have a "small footprint." The townhouse is ideal for wealthy upper-class individuals who have multiple homes. They can use the townhouse to visit family members, check out a special event or just have a change of scenery.
A row house is in the same property category as the townhouse. Typically a rowhouse might have many of the same outward appearances as a townhouse, but is usually reserved for more low- to middle-income occupants. Row houses will tend to be smaller and less luxurious than a standard townhouse.
In suburban neighborhoods, the townhouse term is used for non-standard housing units. The townhouse offers a little more privacy than a typical apartment or condominium.