At an 10,000 ft overview level, DMS can be considered as a "Document Storage" (not trnasaction storage) unit. Assume a business where for every transaction - say for example Quotation - there are lot of paper work - say contracts, drawings, product specifications etc. etc.you can usually store them as attachements (Documents tab) to the transaction.
To effectively handle these attachments, SAP has what we call the CMS (Content Management System). The documents can be stored in variety of forms with in the SAP database or in external file system, HTTP content systems etc.
It becomes critical to maintain a proper relation with the documents and transactions and relation between various documents. Documents themselves can have attributes such as versions, approved etc.
For businesses that have extremely complex docments and large size of these documents, it becomes critical to store and handle them effectively so that the regular transaction processing in R/3 or CRM system is not slowed down due to system and resource requirements.
So, SAP offers DMS - a framework that allows one to Design or Model the document structure - like how the documents are related to each other etc. - and integrate with the regular transaction processing.
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