The PATH is an environment variable that instructs DOSBox where to find an executable if one cannot be found in the current directory.
Each element should be a full path (drive letter and sub directories) for clarity, and they should each be separated by a ;. Linux and Apple users should be aware that the current working directory is always checked first (unlike your host system, which requires a ./ to be inside your path). By default the Z:\ is at the beginning of the PATH making the default DOSBox utilities available to you no matter what sub directory you are currently in. Very few software tools would require a change in your PATH, usually only system wide command line utilities like text editors.
The PATH can be modified by the SET command.