Terminus was used by a company to treat Lazar's disease. The treatment involved using the radiation from Terminus's engines in uncontrolled doses to remove the disease, often with a lethal amount of radiation.
The Lazars were transported to Terminus using computer-controlled ships with no living crew, only robotic attendants. Terminus, on the other hand, was crewed by slave labour, the Vanir, whose continued work for the Company was assured by the strict control of the drug Hydromel, which protected them from Lazar's Disease.
The Fifth Doctor theorised that before it was discovered and used by the Company, Terminus had been capable of time travel, and that, having journeyed to the beginning of time to dump unstable fuel, had caused the explosion which created the universe (and, eventually, the ship itself, creating a time loop). Thus, Terminus was located at the centre of the known universe. Were a similar fuel dump to take place again, the resulting explosion would destroy the universe. The control centre of Terminus was badly damaged and the main computer faulty, so a near-cataclysmic fuel dump was authorised, but prevented by the Garm — the only being on board with the strength to operate the manual control.
The radiation leak on Terminus meant that a large portion of the ship's interior was isolated. It was called the "Forbidden Zone"; anyone other than the Garm who entered would be subjected to lethal amounts of radiation which could be cured only by intensive decontamination.
Nyssa discovered that, with the help of the Garm and the Vanir, Terminus could be made into a functional hospital and the treatment for Lazar's Disease could be perfected. Nyssa chose to stay on Terminus when the TARDIS departed, to assist in the curing of the Lazars and to help the Vanir produce their own Hydromel. (TV: Terminus)