A handle is a part of the DragObj that you can grab. By default, the DragObj itself is the handle. Setting a handle is common in windowing applications where you can move the window by the titlebar.
var win1 = DragObj.getInstance(document.getElementById("window1"));
win1.setHandle(document.getElementById("window1_titlebar"));
Assuming the following HTML.
<div id='window1'> <div id='window1_titlebar' class='titlebar'>window 1</div> </div>