In essence this means to thank Allah, for the favours which He has provided for us.
To be thankful to Allah is an important part of worship, or faith in Islam. Imam Ali (A) has said,
"Eiman (faith) is divided into two halves: one half lies in patience and the other in THANKFULNESS".
People often ask how you can call being thankful an act of worship, but Prophet Muhammad (S) explains to us in very simple words the following,
"There are people who worship Allah for the sake of (fulfilling their) desires and that is the worship of business people. And verily there are those who worship Allah out of fear of Him, this is the worship of slaves. But there are those who worship out of thanks giving to Him, this being the worship of free minded people and is the best of worship"
Allah does not require our thanks, He does not benefit from it in any way. As always, the reason why Islam asks us to perform any action is so that we may benefit from it ourselves. By thanking Allah, we make ourselves remember that it was He who granted us His blessings, it was not just our own work.
He declares in Qur'an Surah 27, Ayat 40,
"...and he who is grateful, verily he is grateful to his own self, and whoever is ungrateful, then verily My Lord is Self-Sufficient and Bounteous."
A thankful person always benefits, from Allah, as well as the people he lives with, as the following hadith shows:
"That man best deserves a kindness who, when he is put off, bears it patiently; when he is refused, excuses it; and when he receives it, Is THANKFUL."
If we thank Allah, and show our appreciation, then with His infinite Grace, He will grant us even more. In Qur'an, Surah 14 Ayat 7, we are told,
"If you are grateful I will increase My favours unto you..."
But instead, mankind has builds up a very bad habit, they think that everything they get is from their own work, rather then from Allah.
When we tell people that Allah has given us everything, they laugh and say, " This money which I have here, and the money that is in the bank, who has given that to me! Nobody has given that money to me, I have earned it all by MYSELF, with MY hard work."
This shows that they do not understand. The example is very simple and is explained below:
A young boy was sitting at home on his birthday. Suddenly the doorbell rang, and the boy rushed to see who it was.
When he opened the door, he saw the postman with a HUGE parcel. The postman gave the parcel to the boy and went away to deliver the rest. The parcel was so big, it was almost as big as the boy. He rushed forward to open it, and when he unwrapped it, he saw ....... a big, new, shiny bicycle. He was very happy.
Then, later on in the evening, the phone rang, and the boy went to pick it up. When he picked up the phone, he heard his grandmother on the other side of the line, she said to him:
"Did you like the bicycle that I sent you?"
The boy replied, "You did not send the bicycle, the POSTMAN did."
This shows that the boy did not understand that the postman only delivered the bicycle, and did not send it.
In the same way, when we do something good, or come first, or get a reward, we should thank Allah, because He is the one who sent it to us.
How should we be thankful?
If there is a person who has been successful in any way whatsoever, then he should thank Allah for the opportunities which made him successful.
This thanks should not be just in prayers or in words, but in action. The best thanks to Allah, is by PERFORMING SOMETHING WHICH HELPS OTHER HUMAN beings, because Allah is above any needs.
Yet, even after all the blessings Allah, grants, we still forget and pretend as if it was all our own doing.
Allah says in Qur'an Surah 100, Ayat 6-8,
"Truly Man is, to his Lord, ungrateful; And to that fact He bears witness by his deeds; and violent is he in his love of wealth."
After we offer our prayers, we should go into Sajdah, and actually talk to Allah, thanking Him for the favours we received that day, thanking Him that no accident occurred, that we have been given another day to live.