Well, there is the famous (or “infamous”) “116 Common Questions” article in the DreaHost wiki, which might have some “general” FAQ type stuff in it, but essentially the DreamHost wiki is where most of the documentation for DreamHost is maintained. In addition, you may find some useful information in the “Unofficial Knowledge Base” (this is an archive of the old “Kbase” that the wiki replaced). While all the articles in the old Kbase were migrated to the wiki, not all of the user additions/comments made the move, and there is some real gold in there (though some of it might be out dated). The wiki really has a lot of information, but sometimes it is hard for new users to locate what they are looking for because they don’t know the right search terms to use.
I think part of what might be confusing you about that issue is that you don’t understand what the database does and what is is used for. The “applications” (blog creation software, forum software, Content Management Systems (CMS), etc.) that you find in the “Advanced one-click installer” screens are programs (collections of scripts) designed to accomplish particular functions.
All programs need someplace to store the data they need to operate. This “place” can be “data” structures in the program code itself, files on a computer system, a database, etc… One popular method for storing this data is the use of a database, and many programmers use the MySQL database for this. In other environments (your home computer, a dedicated webserver where you are the only user, etc.) these programs can often create they database they need themselves without any interaction on your part (if the programmer arranged it that way), but this is a “less than best” method on a shared web server where many users will run identical applications and many such databases (that need to be kept separate and private!) are needed because of potential naming conflicts, privacy, security, and data integrity concerns. Different environments handle this in different ways, so programmers often take the approach of requiring that the database to be used by the application already be in place, and then just provide a means to indicate to the program which database to use. This allows the same to program to be run by many different users, with many different databases; it can even allow for different types of databases.
The applications in the “Advanced one-click” installer are like this - part of “installing” them is indicating to the programs what type of database to use, which database to use, and the credentials for accessing that database (database user/password). The “one-click” installer know this, so when you use it to install the application, it ask you whether to use an existing database (and if so, which one) or whether to create a new database for the program to use.
If you know for certain that a given application’s tables will not conflict with another application’s tables in a single database, then you might choose not to create a new database, but to just use an existing database to store the “new” application’s data. Many program allow for tables to have “prefixes” assigned to their table names to facilitate this, such as WP_users, or jos_users, to differentiate the “WordPress” table named “users” from the "Joomla! table named “users”, and this is especially useful for systems where you may only have a limited number of databases.
On DreamHost, however, you can have as many databases as you want, so you can give each application its own database if you choose to do so, and many (especially beginners) find this an easier concept to grasp as each application has all its data in its own database.
All that said, the reason you have to “create a new database” (or select an already existing database) for use by the application, is to insure that the needed database is ready and available for the application to use to store its data. Once this is done, the installer can proceed to place the program code of the application into your directories, configure the application to use the appropriate database, and then place initial data into the database, completing the installation.
I understand that searching can be difficult - one thing you should always remember is that Google can help you with this. DreamHost is popular enough and has been around long enough that many have written tutorials about DreamHost, and Google will also help you find thing within the DreamHost wiki and forums