Disk images are the way most software came packaged before the Mac App Store, allowing developers to pack entire folders full of installers and files into a single compressed image, ready to send acros the internet at a moment’s notice (and the payment of a shareware fee, hopefully). DropDMG makes this process super simple.
Heading over to the developer website, you can download a .dmg file (natch) to install DropDMG, or you can just grab it from the Mac App Store. Once downloaded, it should open up in the Finder, and allow you to drag the app icon over to your Applications folder.
Folks wanting a more advance experience can use DropDMG to create encrypted disk images, use background pictures and custom icons as well as adding RTF license agreements. Developers that need to do the same type of .dmg file creation can save these settings into different configurations, keeping the amount of time intensive labor down when creating disk image files.
One non-developer use might be to create your own clone or backup disks, compressing them and saving space, or creating an encrypted disk image to store sensitive personal files.