To create a symbolic link, open Terminal, and cd into your Dropbox folder. Then run a command like this. This command would add a symbolic link for a folder called Test that is in your Documents folder:
ln -s ~/Documents/TestUsing symbolic links allows you to add items to your Dropbox folder yet leave them in their "correct" location. So you could, for example, put your entire Documents folder in your Dropbox folder - if you have enough space - yet leave it in its standard location in your home folder.
Also, if you want to back up, say, your Documents folder to Dropbox in this manner, the backup won't take up any extra physical space in the Dropbox folder on your Mac.