ahsanb,
With regards to gearboxes, the term "dry well" describes a sort of scupper or annular cavity formed in the housing around the outboard side of a shaft oil seal. Beyond the seal and cavity, the dry well has a close fitting opening that the shaft passes through. The dry well is basically a shield that helps to keep external debris and moisture away from the seal.
Aircraft gearboxes sometimes use pressurized air labyrinth shaft seals (the air pressure "blows" the oil back into the gearbox). These shaft seals are non-contacting, and have no friction and very long life. But they also weep oil when the gearbox stops operating and their air pressure feed halts. These gearbox seals must have dry wells to collect this lube oil seepage, so that the inside of the nacelle stays nice and clean.
Hope that helps.
Terry