At DreamHost each user gets a "home directory." This will be a filesystem path '/home/username'
Now the Apache web server software needs to know where to find files that people access over the web. So for each domain or subdomain Apache is configured to start looking in a directory that it calls "document root". Root in this case is a relative starting part on a hierarchical (tree-like) structure, not necessarily the beginning of the entire structure.
Going back to the home directory, the document root is going to be a subdirectory, ie '/home/username/example.com/'
Now the DreamHost web panel doesn't use the Apache terms. First it asks you which user is going to be the 'FTP / CGI runs-as' user. So at that point you know the document root path will start as '/home/username'. Next it asks you for the "web directory" which will be the rest of the path, you could stick with just the name of the domain, but you can nest it as well, ie '/home/username/clients/johndoe/johndoe.com/'
So when one says to install a web application to "root" they mean document root. If you forget what it is just go to the DreamHost web panel and "Edit" the hosting settings and it is the path you see for "web directory" and make sure you are logging to FTP or shell as the username in the path.
Not all applications may let you install to a document root, they might stick or require their "core" files in a subdirectory and then have the web server use special rules in an .htaccess file in the document root. Also its more secure to stick "library/configuration" files into a non-web accessible directory and just stick an "instance script" in the web directory somewhere instead.