In general, the dugout is occupied by all players not prescribed to be on the field at that particular time, as well as coaches and other personnel authorized by the league.
In baseball, the manager, with the help of his assistants, will dictate offensive strategy from the dugout by sending hand signals to the first and third base coaches.
The term dugout refers to the area being slightly depressed below field level, as is common in professional baseball.
In the early days of professional baseball, the seating areas were often constructed high enough that the bench was at field level.
MLB rule 3.17[1] specifies that "no one except players, substitutes, managers, coaches, athletic trainers and batboys shall occupy a bench during a game."
The rule also stipulates that players on the injured list are allowed in the dugout, but may not enter the field of play at any time during the game.
[3] A live ball entering a dugout becomes dead and the batter-runner and any base runners advance in accordance with Rule 7.04(c).
Even the two oldest parks still in use differ on this point: the Cubs sit on the third-base side at Wrigley while the Red Sox inhabit the first-base dugout at Fenway.