It’s a literal towel on the floor, usually the last one used. Then after everyone has had their showers/baths, the floor towel goes into the wash and the towels used once by a person are hung to be used one more time.
I do also have bath rugs but they also can go in the wash if they sit wet on the floor. But typically an actual towel to catch the actively wet drippings.
Shit you got me. Good night!