Also called a house, a dwelling is where you can sleep, put your gold into the coffers, chat with friends and so on.
You can give out keys (limited) to other players and share the coffers with them.
Dwellings are acessed in the "Local Dwellings" of every village. You can buy/build dwellings there.
To buy/build a treehouse you must have 1 Orochimaru Kill (Genin).
To buy/build a cityhouse you must have 4 Orochimaru Kills (Chuunin).
To buy/build a castle you must have 25 Orochimaru Kills (Sannin). Note that castles can only be built/bought in special places.