What is dwm.exe

dwm.exe is a Desktop Window Manager from Microsoft Corporation belonging to Microsoft® Windows® Operating System.

dwm.exe is the Desktop Window Manager and is responsible for the graphical effects in Microsoft Windows Vista operating system such as 3D effects, live windows previews and windows transparencies.

The Aero interface in Windows Vista can be quite taxing on system performace in certain computers and you can switch it off or reduce the screen resolution to increase performance.

dwm.exe is a system process that is needed for your Windows system to work properly. It should not be removed. Check Windows now to identify removable processes that are slowing down your computer.

This process is considered to be CPU intensive. Without proper management, CPU intensive processes can manipulate system resources and slow you down. 

Is dwm.exe harmful?
This process is considered safe. It is unlikely to pose any harm to your system. 
Since dwm.exe is a system process it should not be stopped. The process is required for Windows to work properly.