https://en.wikipedia.org/wiki/Municipal_bond

The in-game manual gives a pretty good explanation about it. I'm more familiar with the Mac version than the Windows version, having been given the game for my PowerMac 6500/300, but hopefully it won't be too different. The Help was better than manual on the Mac, giving far more detail on various things and controls.

That said, the bonds are basically getting a loan from a loan shark. Something to do as a last resort if you can't save enough money and your power plant just disintegrated because it was 50 years old. Getting four bonds to buy a new fusion plant can easily kill your budget and get you inescapably in debt.
The interest rates are deceptive. Unlike a real life bank loan, credit card, or car loan, they use a monthly interest rate rather than a yearly. In real life, the monthly interest is calculated by the balance*(interest rate÷12). In the game you get charged the interest rate each month. Also they never get paid off via normal payments. You keep paying interest until you repay the full $10,000 principle.

So, be very careful using them. In order to beat some of the scenarios you have to, but in most of those you do get some decent tax money once you raise taxes after the scenario is won, so you can have a prayer of repaying the loans eventually, especially if you invest in hydro-electric power so you don't have to pay for a new power plant every 50 years.
In a normal non-scenario city, you should try to avoid loans at all costs since you often won't have enough spare income to pay them back AND buy new power plants if you go for an entirely flat map with no chance of running your city off hydro power.

tl;dr?
They are quick, high-interest loans for when you really need money for something, typically a new power plant. Be careful, as it is possible to get into financial debt you can never get out of.