Theresienstadt was a ghetto/camp established in Northwestern Czechoslavakia as a garrison town in the late 18th century during the reign of Emperor Joseph II and named after his mother, Empress Maria Theresa. History During WWII it served as a camp which the Nazis used for a "resettlement camp."
The camp was in use for three and a half years and basically served several purposes. It was used as a transit camp from which the Nazis deported Jews to various camps in other parts of eastern Europe. These were either labor camps, concentration camps or death camps. Next, it was used as a ghetto-labor camp where the Nazis jailed Jews that hailed from Germany, Austria and Czechoslavakia. There were educators, artists and the like who may have been important in some way to the Nazis. This was done in an effort to send misleading propaganda to the outside German world, mostly to convince them, and later the rest of the world, that the Jews were being engaged in productive labor and other useful endeavors and not the outright murder, neglect, starvation, cruelty and disease that was the reality.
Theresienstadt was also a holding pen where the expectation was that the Jews would die a quicker death from the sub-human conditions and cruelty that were the norm in this camp before they could be transported to death camps in the east.
The Nazis eventually used Theresienstadt as a thriving community for propaganda. USHMM Reacting to the pressure exerted on them due to the deportation of Danish Jews, the Nazis permitted The Red Cross to visit. They cleaned up the ghetto, planted gardens, painted houses, staged social and cultural events, etc. making it appear as if this was a good place where the Jews were treated well. The Red Cross would then go out into the world and tell the world no one was being mistreated and that these Jews were resettled for their own safety. Of course, once the Red Cross was gone, the deportations and cruelty resumed.
Although the Nazis tried to present themselves to the world as benevolent, the true picture of Theresienstadt was defined by the artist's community that existed within the walls. These individuals left behind a legacy of drawings and paintings that depicted the brutality and the grievous conditions that Jew had to endure in camps and ghettos all over Europe during The Holocaust.



Sources

About.com 20th Century History
http://history1900s.about.com/library/holocaust/aa012599.htm

The Holocaust Chronicle
http://www.holocaustchronicle.org/StaticPages/592.html

United States Holocaust Memorial Museum
"The Holocaust." Holocaust Encyclopedia
http://www.ushmm.org/wlc/en