Hi durga,
Threads have majorly 5 states. Running, ready, Suspended ( truncated in jdk1.2), blocked ( say on I/O ).
So, when we make a sleep() call to a thread, it goes from RUNNING state to SLEEPING state ( for the specified period of time ) and remember when the time elapses, it does not continue execution right away. And the thread goes to the READY state. And then waits for the scheduler to allow the thread to execute. So, we can say the given time in SLEEP() method is the at least time for which the thread will stay inactive.
Also remember that only way a thread can goto READY state from running and RUNNING state from READY is the call by YIELD() method. No other call makes a thread goto running state from SLEEP(), BLOCKED().
Hope that will help u.