Temperature is a measure of the amount of heat present. In Creatures 2, it is a property of rooms; in Creatures 3/DS, it is modeled as a cellular automata. It can affect the world's weather and ecology, as well as your creatures, especially TWB creatures. Many things emit heat or lower the temperature, like rain, the volcano, the fireplace agent, the heater agent, and so on.
In C2, rooms of the surface type have their temperature altered by the time of day and the season, and all rooms have their temperature influenced by adjacent rooms, depending on how open they are to each other. Temperature is also important for clouds - if the air above the oceans is too cold, water vapor won't evaporate and form them. Clouds produce rain when it is warm and snow when it is cold. Some plants such as the carrot or potato also depend on the temperature being in the right range to grow. Like other room properties, it can be tracked with the Ecology Kit.
Although a CAOS command related to temperature exists in C1, it does not appear to be fully implemented, according to The Shee's Lost Knowledge.