the dryad fights by aura, not by weapon
When enemies get close to the Dryad, she does not shoot at them. She drops a ward on the ground: two rings of leaves, the outer one marking how far it reaches. Everything friendly standing inside picks up the blessing. Every enemy inside that also has a clear line of sight back to her picks up the matching debuff. That line-of-sight requirement is the part people miss. A Dryad sealed in a windowless box on the far side of your base contributes nothing to a fight happening twenty tiles away.
the ring is not a fixed size
The ward grows in stages rather than snapping to full width. For the first second and a half it only covers about 18.75 tiles. It then expands to 37.5 tiles over the next few seconds and sits there for a while, which is the size worth planning around. Right at the end it balloons out to 75 tiles over about a second, and then the whole thing dissipates. The buff and debuff do not start applying until half a second after the leaves appear, so a fast enemy can cross the ring and hit you before either side of the effect exists.
what the blessing does for you
Standing in it gives you defense, health regeneration and a thorns effect that bounces half the damage you take back at whatever hit you. Town NPCs get a larger defense bonus than you do and a smaller reflect. The regeneration is the underrated half: it ticks steadily, and during a long defensive fight it does more total work than the defense number suggests.
The reflect has stacking rules worth knowing. A Thorns Potion or the Turtle armor set bonus replaces the Dryad's reflect rather than adding to it, so drinking the potion during a town defense can be a downgrade instead of an upgrade. The Cactus armor set bonus is the exception and does stack. Reflected damage is capped at 1,000 in any case, so this is not a way to delete a boss.
the damage side scales with your world
The debuff ticks on enemies for a base of 4 damage per second, then gets multiplied by how far your world has progressed through the boss list and again by a difficulty multiplier, with the final figure rounded down. A world at plus forty percent progression on Expert works out to 1.4 times 1.5, so 4 becomes 8.4 and then 8. In a fresh world it is 4 per second and by the end of the game it has roughly doubled or tripled depending on difficulty.
That is small against anything with real health. It is genuinely good against the things it was built for: waves of low-health enemies that keep walking into the same patch of ground.
getting value out of it
Treat the Dryad as a defensive structure and build around her position. Put her house at the edge of the arena you actually fight invasions in, with open air or platforms rather than solid walls between her and the fighting so the debuff can land. Keep her near the Nurse so one trip covers healing and the aura.
The pairing that pays off is a Blood Moon or an invasion, where dozens of enemies funnel through the same corridor and every one of them is taking the tick while you take reduced damage and regenerate between hits. For a boss fought out in the open, she will almost never be in range, and building a house at the arena purely for the aura is usually not worth the trip.