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You're systems needs to be running telnetd to "listen" for telnet connections.
By default telnetd is NOT turned on because telnet is an insecure transport. My first recommendation is do NOT turn on telnetd. Instead of doing telnet use ssh which encrypts traffic including login/password which telnet does NOT do.
If you still feel you must turn it on despite the recommendation you would want to install xinetd (not installed by default on Fedora). You can run "rpm -q xinetd". If it doesn't show it installed you should be able to install it with "yum install xinetd" (or from your installation media if you don't have internet).
Once xinetd is installed you should:
ls -l *telnetd* (should show something like krb5-telnet.
edit the file (e.g. vi krb5-telnet)
Change the line that says "disable=yes" to say "disable=no"
Run "xinetd -c" to reread the xinetd configuration.
xinetd will listen for connections on the telnet port (23) and start telnetd to answer the request.
Also you may need to open access to port 23 in iptables and/or selinux.
If you really only want to use it on localhost (127.0.0.1) you should modify those to only allow the connection from that IP.
FYI: You do NOT need to start telnetd to use the telnet command outbound or to attach to other listening ports. e.g. People often do something like "telnet host 25" to attach to port 25 on a given host in order to check mail access (mail programs listen on port 25). So you could do "telnet localhost 25" to test your own mail server without starting telnetd.
iptables is a built in firewall that allows you to open, close or redirect network connections. It is granular so that you can specify which ports to allow to/from which IPs.
SELinux is newer "Security Enhanced" Linux which is sort of like a firewall on steroids. Most people disable SELinux because the documentation for it is almost non-existent. It was created by the U.S. NSA.
If your system is not on a network then you don't need either of them. However if your system is on an internal network and any of the other systems are exposed to the outside (via DSL, cable, dial-up) then having iptables on is still a good idea because it means anyone that hacks into one of your systems still has to do some work to get into this one.
For most Linux topics there is some documentation available on the system. Just type to see if it exists.
There may be more information in the info pages: