Often defined as the "northernmost part of the world that the ancients believed to be habitable"; it has been variously identified as the Shetland islands, Norway, or Iceland. However, this meaning is no longer particularly useful in common parlance, so a new definition has emerged.
Nowadays Ultima Thule is often used to mean the farthest possible place, or more metaphorically, a remote goal, or an ideal (and perhaps hidden/lost) place. It might also refer to the furthest one could possibly travel. In modern usage is often shortened to simply Thule.
Ultima is Latin for 'farthest'. Thule comes from the Greek Thyle, defined as "a land six days sail north of Britain".
See also: El Dorado, Timbuktu, Shangri-La.