This kind of fostering is usually for children who have had to be taken from their parents because of neglect or abuse, but it is thought that there is hope that the parents' behavior can be changed enough for family reunification. While the child is being fostered, the parents will be going through re-education and/or therapy, and their behavior and progress will be closely monitored by social services and the foster parents.
There is usually good bit of contact between parents and child, under supervision, as they learn and practice new parenting skills. This can be in the foster home or at social services offices. The parents are definitely on probation, and they know it. If they fail to make enough progress, the children can be placed for adoption, and this can lead to conflict between the birthparents and the foster parents.
This kind of fostering can be very stressful for the foster parents, especially if the children are returned to what they think are unsatisfactory home situations. It's even worse if the children come back into foster care after further neglect or abuse. Some agencies place a great deal of confidence in the judgment of the foster parents about how ready the birthfamily is to take the child back; others do not, but in any case the foster family has no legal standing. In some cases the birthparents may eventually decide themselves that the children will be better off in permanent new families.
In the U.S., the Adoption and Safe Families Act of 1997 (PL 105-89) requires states, in the case of children under the age of 10, to initiate or join proceedings to terminate parental rights for parents who have not met rehabilitation goals in 18 months in an effort to allow these children the opportunity to find permanent families more quickly and minimize their time in foster care.