Emulators are programs that simulate other hardware - e.g. make your Dreamcast think it's a NeoGeo or PlayStation.
Homebrew is software made by amateur programmers. That includes games, apps, etc.
In most cases emulators are done by amateur programmers in their spare time (exceptions: Bleem!cast, Nintendo Wii, etc.). That doesn't mean they are amateurish done, but it does mean that developing needs more time than a professional team would need.
Images are copies of a precompiled disc.
Similar to your HDD they need a certain structure. In this case boot sector 'IP.BIN' and actual Dreamcast program 1ST_READ.BIN plus everything else you or whoever has put on it.
You download an image and burn it with the proper program, e.g. Nero, DiscJuggler, Alcohol120% or BootDreams.
BootDreams also creates images - and it's freeware!
The standard format for Dreamcast images is DiscJuggler's *.CDI format. This format can be burned with DiscJuggler itself, Alcohol120% or BootDreams.
Nero doesn't understand this format.
A while back I wrote a tutorial on how to create and burn these images in a few minutes:
http://www.dcemu.co.uk/vbulletin/showthread.php?t=21631
Clicking on the 'scenedicate' link in my sig will give you a good example of a Dreamcast image.
You can also download a load of images at http://www.dcevolution.net
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