What is an Android dock? When is a phone considered "docked"?

In Android's "daydream" settings, you can set "When to daydream" to "While docked" or "While charging." What does "Docked" mean? The only products I've seen that are sold as android "docks" are just stands that are shaped to prop up the phone at an aesthetically pleasing angle while charging - the phone doesn't know if it's in such a stand, though. I haven't found an Android equivalent of the music-playing docks that the iPhone can connect to. The developer documentation describes 4 types of docks: Car, Desk, Low-End (Analog), and High-End (Digital). (The documentation implies that #3 and #4 are subtypes of #2.) So, what is a dock? How does the phone decide if it's plugged into one, and which kind it is? What can docks do - play music? Can they do other things? Is there some sort of open standard defining how an Android phone talks to a dock (if that's even possible)? Can anyone point to example products representing each type of dock?