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Why pray the Divine Mercy Chaplet? When we turn to God in repentence, in trust and faith, asking his forgiveness, He is quick and faithful to forgive us, give us peace and begin to reach out through us to heal and show mercy to others. The Divine Mercy Chaplet is a prayer to Jesus for mercy. More simply put, praying the Divine Mercy Chaplet is to obtain mercy, to trust in His mercy and to give mercy to others.
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The binding prayer is to help break demonic influence, opression and to strengthen God's protection.
There is a very good description of what the dwelling prayer is in the teaching Experiencing Jesus in Dwelling Prayer. There is no prescribed formula for the dwelling prayer. Essentially, you want to pray the Binding prayer first to "clear the air", then worship the Lord. It is not uttering "Jesus is great" as a mantra while thinking of the latest sports scores. Dwelling prayer is the type of prayer that has your heart and entire attention focused on Jesus. Over time, dwelling in Jesus' presence, he will reveal himself more and more. It probably would not hurt to say "Jesus, I want to get closer to you. I do want to be closer to you, but I am having difficulty. Please, in your wisdom and love for me, teach me, guide me and show me how to dwell in your presence."