What is terminal velocity? How it works?

Falling objects fall downward under the influence of gravity. So when an object falls through a liquid or gas, it drags the layers of the liquid or gas that the object comes in contact with. As a result relative velocity is created between different layers of liquid or gas. The viscosity of the medium creates a barrier against this relative motion. When this upward viscous force equals the force causing the object to move, the total effective force on the object is zero and the object continues to fall through the medium at constant velocity. This constant velocity of the falling object is called terminal velocity.

If a sphere falls under the influence of gravity through a viscous fluid, initially its velocity increases due to gravitational acceleration, but simultaneously the drag force on it increases so that the net acceleration of the object decreases. At some point the net acceleration of the object is zero. The object then begins to fall with constant velocity. Then this velocity is called terminal velocity.