The plywood thickness is the width of the plywood in between the black arrows. 3 / 4 inch plywood for example in between the arrows would be 3 /4 of a inch thick or wide.
Plywood has been made for thousands of years.
This was originally done due to a shortage of fine wood. Thin sheets of high quality wood were glued over a substrate of lower quality wood for cosmetic effect, with incidental structural benefits. This manner of inventing plywood has occurred repeatedly throughout history.