Located like a thin capsule on the outside of the thalamus itself. The nucleus contains primarily GABA-ergic (i.e. inhibitory) neurons.
The nerve fibers that mediate the round-trip traffic between different thalamus nuclei and the cerebral cortex emit lateral branches to and excite, i.e. "push" the GABA-ergic neurons of the reticular nucleus, which in turn inhibit the thalamic nucleus that the return traffic touches. The coupling is thought to dampen the tendency of the thalamo-cortical neurons to overreact to excitatory incoming signals.