The Reset Terminal command in the Network menu recovers from certain kinds of errors on a terminal session, especially a phone session.
On a phone session, it is possible for line noise to create whimsical characters which make TOPS Terminal think it should change into some obscure character set, for example, Swedish or graphics mode.
When this happens, the session's window will be hard or impossible to read until you give a Reset Terminal command. This clears the screen and resets the mode to normal.
You wouldn't want to Reset Terminal if such an error condition has not arisen. For instance, if the software running on the other computer put the session into graphics mode deliberately, then you would be messing up its display if you were to say Reset Terminal.
Reset Terminal appears in the Network menu only if you have requested the Full Menus preference.