"Long running" can be quantified pretty well, a thread that takes more than half a second is running long. That's a mountain of processor instructions on a modern machine, you'd have to burn a fat five billion of them per second. Pretty hard to do in a constructive way unless you are calculating the value of Pi to thousands of decimals in the fraction.
Practical threads can only take that long when they are not burning core but are waiting a lot. Invariably on an I/O completion, like reading data from a disk, a network, a dbase server. And often the reason you'd start considering using a thread in the first place.
The threadpool has a "manager". It determines when a threadpool thread is allowed to start. It doesn't happen immediately when you start it in your program. The manager tries to limit the number of running threads to the number of CPU cores you have. It is much more efficient that way, context switching between too many active threads is expensive. And a good throttle, preventing your program from consuming too many resources in a burst.
But the threadpool manager has the very common problem with managers, it doesn't know enough about what is going on. Just like my manager doesn't know that I'm goofing off at Stackoverflow.com, the tp manager doesn't know that a thread is waiting for something and not actually performing useful work. Without that knowledge it cannot make good decisions. A thread that does a lot of waiting should be ignored and another one should be allowed to run in its place. Actually doing real work.
Just like you tell your manager that you go on vacation, so he can expect no work to get done, you tell the threadpool manager the same thing with LongRunning.
Do note that it isn't quite a bad as it, perhaps, sounds in this answer. Particularly .NET 4.0 hired a new manager that's a lot smarter at figuring out the optimum number of running threads. It does so with a feedback loop, collecting data to discover if active threads actually get work done. And adjusts the optimum accordingly. Only problem with this approach is the common one when you close a feedback loop, you have to make it slow so the loop cannot become unstable. In other words, it isn't particularly quick at driving up the number of active threads.
If you know ahead of time that the thread is pretty abysmal, running for many seconds with no real cpu load then always pick LongRunning. Otherwise it is a tuning job, observing the program when it is done and tinkering with it to make it more optimal.