A DTML Document is equivalent to a DTMLMethod, except that it adds it's own namespace. See also Page Templates. Whereas DTML methods are generally applied to other objects as templates , DTML documents generally stand alone.
DTML Documents mix content and code. In general this is considered bad practice since it mixes concerns too much. They are also confusing because it is not very clear when you would use a DTML document over a DTML method. My advice, don't use them and you won't be confused, or at least you won't have to care if you are... --Casey
Yes - you'll never need a DTMLDocument. Use a DTMLMethod instead. When you do want DTML in your content, though, or you want a more comfortable way to test DTML, consider a DTML-enabled zwiki page for a nice productive edit-test cycle. --SM