Dom0 is the initial domain started by the Xen hypervisor on boot. Dom0 is an abbrevation of "Domain 0" (sometimes written as "domain zero" or the "host domain"). Dom0 is a privileged domain that starts first and manages the DomU unprivileged domains.
The Xen hypervisor is not usable without Dom0. This is essentially the "host" operating system (or a "service console", if you prefer). As a result, Dom0 runs the Xen management toolstack, and has special privileges, like being able to access the hardware directly.
Dom0 has drivers for hardware, and it provides Xen virtual disks and network access for guests each referred to as a domU (unprivileged domains). For hardware that is made available to other domains, like network interfaces and disks, it will run the BackendDriver, which multiplexes and forwards to the hardware requests from the FrontendDriver in each DomU.
Most commonly dom0 runs some variant of Linux, but Xen dom0 implementations also exist for OpenSolaris and NetBSD. Modified versions of Linux, NetBSD and Solaris can be used as the dom0. See OS vendor documentation for specific steps. Current official documentation may be found at the following sites: