As zeFrogLeaps said, the term has been around meaning a small picture for a long time (wiktionary says the first attributed usage of “thumbnail-sketch” was in 1852).
I wonder if it caught on in common usage because of the thumbdrive? I think IBM released one of the first ever consumer portable flash drives under the brand name “ThumbDrive” and it eventually became a generic term (much like hoover for vacuums)
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