Rxvt is a small and minimal terminal emulator that is still in use in modern times. It started life as a fast alternative to xterm, which itself at one time was considered quite bloated. The entire purpose of the program was to be a stripped down implementation with as few bells and whistles as possible, just to give you a command line.
It's emphasis is all on performance. It's lean and trim and boots up with a minimal memory footprint. This is much more important in an era of computers that only had 64MB of RAM or something. Rxvt was popularized on Linux and Unix systems by people who wanted a terminal that just worked without hogging resources. The name “extended virtual terminal” implies that it provides more functionality than the original vt100 terminals but with minimal extra fluff on top.
Performance is fantastic by comparison to gnome-terminal, konsole, and other heavier terminals. Opening it is practically instant, resources usage is low, and it doesn't stutter when scrolling through large log files. If you're on a low-end machine or simply hate waiting even half a second for a terminal to launch, this is for you. Text rendering is clean with no artifacts and fonts do not look blurry when resizing the window aggressively.
Configuration is... one way to put it. There's no graphical menus for customization and rxvt has kept that philosophy throughout the years. You control everything through X resources and optional command-line arguments. This means you're actually editing .Xresources files by hand and setting colors, font settings, scrollback buffer lengths and the like manually. It's as 90s Unix as you can get—it's a powerful thing if you know what you're doing but also a kind of intimidating proposition if you don't. Fans will tell you it's total user control, detractors that it's overcomplicating things that should be easy.
Transparency and compositing work fine, as long as your window manager supports it. You can set the transparency of the background which looks nice in screenshots but has very little practical use. Reading text on top of a wallpaper with lots of detail is just a recipe for headaches (but people love their eye candy so it has to be there).
Scrollback buffer can be configured to whatever line count you want, although if you set a very high number you start using more memory and that's going against the idea of a lightweight terminal emulator. Keyboard shortcuts are there but you have to define them yourself (surprise!). Mouse support for selecting/copying text works fine, middle-click paste also works as expected because it's just X11 behaving as designed.
In general these days, rxvt is a bit of a dinosaur. Many other terminal emulators like Alacritty or kitty or gnome-terminal have closed the gap on performance while providing lots of features that are actually useful and modern. There's not a lot of community around rxvt any more, development is slow and piecemeal, documentation tends to be spread across arcane mailing list archives and man pages. rxvt still runs great and works just fine but there's not much of a reason to use it in modern times unless you're maintaining an old system or you're just into that minimalist style.
Development of rxvt is sorta fractured. The original rxvt project is abandoned at this point, rxvt-unicode gets updates every once in a while but it's not a very active project. There is also mrxvt (multi-tabbed rxvt) but that project seems dead as well. If you are looking for something actively maintained and with similar design philosophy you might want to look at st (simple terminal) by suckless (different codebase but very similar approach).
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