The idea was similar to how web components are used today. Your web page would contain custom applets for a fancy input field, a calendar control date picker, and whatever other controls html didn’t provide, all implemented as Applets.
It could have worked out and the web today would have looked very different except that Java applets always performed terribly on first load. Nobody wanted to have their customers wait 30 seconds for the custom controls to initialize.
I sometimes wonder what might have been if Sun had actually fixed the initialization of Applets. In many ways Applets were nicer to develop than today’s web components.