DreamCompute is Infrastructure as a Service (IaaS): virtualized disks (block storage), networks and computing power, wrapped around a powerful API. Basically, a system that allows you to create and manage the basic infrastructure for your applications without having to deal with hardware: call an API and within seconds you have your favorite operating system running.
DreamCompute is not technicall a paas service: it's a lower level, below paas. You can install paas like CloudFoundry or OpenShift on top of DreamCompute, though.
To your question of scaling on demand, in theory you can: DreamCompute uses the OpenStack APIs and it's possible to insert some logic in your application to add resources as needed. It's hard to give you a more precise answer than this without more details. What kind of application are you working on?