But I still don't quite understand what thermal resistance is.
Short course--
Thermal resistance is the resistance to the flow of heat in a system which causes a gradient in temperate, must as electrical resistance causes a gradient in voltage when current is flowing.
With semiconductors there are several parts to the thermal resistance:
1) semiconductor junction (chip) to case
2) case to air if mounted in air (this can be many 10's of degrees C/W depending upon the case type)
3) case to heat sink if mounted on a heat sink (typically a few tenths of a C/W if thermal grease is used)
3) heat sink to air (varies significantly depending upon the size and type of heat sink)
Look at
this data sheet. On the second page there is a table labeled "THERMAL DATA". It states that the junction to case thermal resistance is a maximum of 1.5 C/W. This means that each watt the transistor is dissipating will raise the semiconductor chip 1.5 degrees C above the case temperature.
If you look at heat sink data it will also have a thermal resistance to air in degrees C/W.
To determine the temperature rise of the chip you add all the thermal resistances together.
You multiply that sum by the power being dissipated by the chip to determine the chips temperature rise above ambient.
You then add the maximum ambient temperature to that to get the maximum temperate the chip will reach.
This total can not exceed the maximum for the device as shown on the data sheet (in the case of the referenced transistor it is 200C). For good reliability you typically want to operate 25-50C below this maximum. If the total is too high then you need a better heat sink.
Make sense?