Before we get into domain parking I just want to cover a little bit about the process up until you need parking.
You will first go to a site like GoDaddy and see if your selected domain name is available. When you find one that is available (keep in mind that they have tools to help you find an alternative if your first choice is unavailable) you will register the domain name. That means that you don’t really own the name but you lease it for however many years you choose. To avoid losing the name you should put the account on auto renew so the your registration doesn’t lapse and someone else jumps on the name before you do.
So you have registered the name. You then need to decide on whether or not you want private domain name registration and if you do you need to pay for it. Private registration will keep your personal information private from people who look you up on the WhoIs directory. Domain names are registered there and you can generally find out who owns a domain just by looking them up, unless they have registered the domain privately. This is a good option as it helps you avoid spam from solicitors who may run through the database and just look for website owners so that they can solicit their services.
Once you have the domain name you need a place to park it unless you are going to immediately pay for web hosting and use the domain name. So, if I pay for the name 100best-domain-names.com but didn’t want to build a site attached to that domain right away but hold the name in reserve, I need to “park” it. Most companies that you register domains through will offer this feature and a lot of times it is a free service.
One benefit of having your domain parked is that instead of people just typing in your domain name in the Internet browser and coming up with an error message that tells them the address doesn’t exist they will see a page that says that it is parked with GoDaddy.com (for example) and that the site is up and coming. It does not give a date so you don’t have to feel any pressure and it won’t give people false hope that your page will be coming really soon.