DreamHost introduces a level of abstraction in how users work, so it is easier for most folks that just need a website, and don't need to admin a server to do so. As you are learning how to operate your own server, let go of what DH or any web panel does.
BTW, you mentioning PuTTY made me think DH probably has some docs on that, and they do!
Hmmm, maybe. It is common to have more restrictions on shell access, as it is easier to elevate privileges or mess something up. That makes
ssh a target for brute-force password attacks, whereas
sftp is used for less sensitive access, and wider use. This is all to explain that it is possible to have access permissions set for different services (
sftp are programs running on your server).
That should give you enough to search for a way to check and change that.
I am unsure as to your exact setup because I don't use PuTTY or SFTP. You may not be able to switch terminal apps, but I recommend you learn to use
ssh, and specifically
scp (secure copy), which does all the stuff SFTP does, but faster and more consistent with other processes you'll use to maintain the server.