I use thumbnails is several different ways.
Most often I use them to help me figure out exactly what I want to focus on in a scene. So often in urban sketching we are confronted with a busy urban scene and it can be hard to hone in on something specific. So I like to play around with different aspects of the location to determine what would make a good larger sketch as in this series of thumbnails I did while in Oaxaca Mexico. I did the smaller thumbnails first then the larger drawing of the church.
Another situation where I use thumbnails is to understand value in a scene. Often I see color before I see value. If I do a black and white thumbnail, especially if I use pencil or gray marker to fill in value, I can end up with a stronger sketch.
A third, and less common, way I use thumbnails is just to understand the layers of a scene – foreground, middle ground, background. Where do things in the scene fall? What is closer? What is farther away? This gives me a pathway as I set up a sketch or painting so I’m familiar with what goes where. I use this more in planting a larger painting.