Payees are a means to store bank account details, so that you can make payments more quickly and minimise data entry errors in future.
If you create a payment with raw bank accounts details, they will then be saved as a payee. Then anyone using the dashboard can simply select the payee to instruct a payment.
Payees can relate to a customer, vendor, employee or internal bank accounts - in short, any account you send funds to. You can map payee IDs to objects in your own system, to make payment instruction more efficient.