in webftp, "host" should be your own domain name or yourservername.dreamhost.com.
webftp can be considered a "lite" ftp client. The advantage is that its always there, you can log on from any computer anywhere to make a change.
What's lost with webftp are many features that other ftp clients make available to you. In short stick with the full installed ftp client. webftp can be used in a pinch but doesn't have to robustness of something like filezilla or winSCP etc.
As for where to put your files:
Navigate to "manage domains" in the dreamhost panel.
find your domain on that page, and look at the "web hosting" column for that entry. It must say "fully hosted", and if it does it will also have a user name there. You MUST log on to FTP with that username to upload files for that domain.
When you log into ftp with that username, one of the directories that will have been created for you is named the same as the domain name. The files for THAT domain must go in it's domain folder.
Specifically if you put an index.php(or html/etc) in the folder named for the domain name it will be served for that domain.
What you can't do: create your own domainname.com folder. I think many people see the examples and think they can log in to ANY ftp account, create that folder and go. THAT'S NOT HOW IT WORKS. You must add the domain via "manage domains" and specify a user. The dreamhost robot will then go create the folder for the domain under the correct user.