You have probably heard about domain name parking. This is what is commonly alas wrongly referred to as domain squatting. Let us first make clear what the domain squatting is. A domain squatter is a person or company sitting on a trademark domain name (for example the name of some international company or wide known product) and holding this domain name for a sale without any intention to use it for different purpose than that is already being used by the rightful owner of the trademark. An example of such a misuse would be cocacolafresh.com or ibook4u.com with words cocacola and ibook being trademarks of their respective companies.
On the other hand, domain parking is a process where one can acquire commonly used search term like for example yourmusicblog.com then park this domain to provide useful links to anything music blog related. Neither musicblog nor yourmusic are trademark, they are commonly used search terms. Now, once domain name is acquired you can use domain parking company like namedrive.com or parked.com and redirect your newly acquired domain to their site. This way parking company will serve targeted adds and helpful tips regarding domain name main keywords (in our example your-music-blog). Chances are that visitors coming to the site will search for music blogs and thus adverts and follow up links shown will lead them in the right direction and you will pocket some spare change every time a visitor does that.
Do not expect to get rich with domain name parking. This can be a valid second source of your household income after you reach 1000-2000 domains portfolio of mediocre to good names (meaning having visitors on them). To get there you need to have patience.