Question: What is a DLL? What is it doing in our computer? Why we need to register it? Is DLL registration a common process of a single command? Is this installed/registered while we are installing a software?

Answer: 
DLLs are dynamic-link libraries:

> 
> Dynamic-link library, or DLL, is
>  Microsoft's implementation of the
>  shared library concept in the
>  Microsoft Windows and OS/2 operating
>  systems. These libraries usually have
>  the file extension DLL, OCX (for
>  libraries containing ActiveX
>  controls), or DRV (for legacy system
>  drivers).
> 
> 
> 

See [Dynamic-link library](http://en.wikipedia.org/wiki/Dynamic-link_library) on Wikipedia.
Let's not forget rundll32.exe. This Windows utility allows you to invoke a function exported in a dll. <http://support.microsoft.com/kb/164787>