I am attempting to create a website in dreamweaver. A friend told me I should use CMS. I cant seem to understand how CMS works. I understand sometimes its an open source, but how do you manage it? how do you start it? What is it exactly?

CMS is a Content Management System, such as Joomla!

You need a basic understanding of how to upload, get a MySQL database going, making sure your hosting supports MySQL and PHP, and a whole slew of other things. You won't ever learn unless you dive in and do it. I found that sort of stuff difficult when I was first beginning, and now it's very simple for me.

There are lots of different types of CMS. You should choose the one that is most suited to your requirements.
Some, like Joomla, are very big and powerful but can be time consuming to set up and maintain. There are smaller, faster and more simple ones that also often create better quality coded sites.
Basically a CMS will allow you to enter content via some form of database (that does not always have to be online). The design is 100% separate from the content so you can maintain and update sites more easily.
Generally unskilled people can enter the content through the simple CMS front end but even experts will find they can create and maintain sites more quickly with a cms than a WYSIWYG editor.