Thread count is the number of threads woven into one square inch of fabric.
Here's an easy way to picture it: imagine a small square cut from your bedsheet, one inch wide and one inch tall. Now count every thread that runs left to right, and every thread that runs top to bottom, inside that square. Add the two together — that total is the thread count.
For example: if a fabric has 150 threads running one way and 150 threads running the other way in that one-inch square, the thread count is 300 TC.