Welcome to Istaria!
To answer your question, dragon hoard is used to improve armor, power your breath weapon, and fuel some special attacks. There are some hoard levels per your level that you should be aware of. To get maximum benefit from your hoard you should aim for meeting or exceeding the cap for your level. Easy way to check where you stand is go to
http://istaria.wikia.com and search for dragon hoard.
One other thing to know about your hoard. It is a one way trip for any items you hoard and you can't get them back. So be careful you don't hoard something you need by mistake. Also, even though we can hoard coins that is a poor use of your coin. Coins will be more beneficial for buying hoard on the connie or formulas needed.
Hope that helps,
Dracaena