A dado (day-doe) refers to the area below a chair rail (aka dado rail or skirting board). The lower boundary is typically a baseboard.
The original function of the chair rail was to stop chairs from damaging the wall. The space below the rail quickly developed into a design opportunity.
A dado (or wainscot) is a great opportunity for decorative painters. Oftentimes, it will have existing paneling, which lends itself nicely to faux marble, wood, stone, and patinas.
If the look of paneling is desired, use trompe l’oeil techniques to create a 3-D illusion (as seen above)