A cupola is placed on a building for a decorative dome effect, according to Cupola.com. It is most often used for churches, cathedrals and palaces.
Cupolas assist in the ventilation of the building, letting in both air and light. They are also sometimes used as belfries or even as lookouts.
Cupolas that are accessible to look out through are sometimes called widow's walks or belvederes, according to the Washington Post. Those with windows are called lanterns and the smallest cupolas are known as monitors.