LOL, I had a feeling you might ask that. I should've anticipated it. Anyway, I used the word Stereo to indicate the use of two signal lines. This would be used as an input from something like a VCR, DVD player, iPOD, MP3 player or any other device which has a stereo audio output.
The reason that there are both Line in and Mic in connections has to do with the electrical requirements of the signals. Often microphones have a much lower signal level than the standard audio outputs from an audio device.
Also, the voltages and current levels are different. It's not a good idea to plug the Line out from an aduio device into a microphone port because the higher current can damage the circuitry. Also using a microphone on the line in port doesn't work well for the opposite reason, not enough current to drive the circuitry resulting in very poor sound.
I'm not really sure what you mean by "what kind of equipment accepts 3.5?" Just guessing, I would say that you are referring to the Red/White outputs (RCA) from something like a VCR, DVD player, TV, etc. These can be connected to your computers line in connector using a stereo RCA to 3.5mm Splitter Y adapter cable (
http://www.newegg.com/Product/Product.aspx?Item=N82E16812120681 ). The "3.5" in this case refers to the diameter of the connector which plugs into your line in port on the back of the motherboard. In fact all of the Audio ports use 3.5mm plugs.
By the way, if you look closely at the picture on the page I linked above you will be able to see three separate contacts on the stereo 3.5 mm plug. Those are the three wires that I was referring to that connect to the contacts inside the Audio ports.