Dharana is the state of one-pointed concentration, when the mind is able to continuously focus on one object without distraction. The limbs leading up to dharana serve to build up to it: asana builds strength, making the body more comfortable; pranayama helps to build focus of the mind; and pratyahara helps remove sensory distractions so that in dharana, one-pointed concentration is achieved.
Dharana is the first limb of Samyama, the simultaneous practice of the three last limbs of yoga. With dharana the focus moves inward. According to Desikachar, “This is what happens in dharana: we create the conditions for the mind to focus its attention in one direction instead of going out in many different directions. We encourage one particular activity of the mind and, the more intense it becomes, the more the other activities of the mind fall away.” He goes on to say that this one point can be anything at all, but it is always just a single object.
The object of concentration could be a certain chakra (energy center), mantra (sound), mental image, or anything you choose. For example, when you sit quietly and maintain your focus only on the breath for an extended period of time, you are practicing dharana. At first, the mind will wander to all sorts of thoughts, but over time, with practice, the distractions fade and the mind becomes more focused.
The practice of dharana can be particularly helpful if you find yourself getting caught up in emotions. During such times, the mind fills with distracted thoughts, many not even based on reality. (Think of the last assumption you made when you were upset. Often, these assumptions are not even real, and thus, not based on reality.) Taking some time to detach from negative thought patterns by first practicing pranayama (to center), then pratyahara (to remove sensory distractions), and finally dharana, can be a great practice for times when your thoughts seem to overtake you.