can someone please explain me why do we need to fulfill a dropship order?

In my environment, that's the step/stage where we've confirmed the vendor has indeed processed and shipped the order -- So creating the Item Fulfillment allows my team to 1.) record the tracking number 2.) email/text the tracking and 3.) mark the Sales Order has Pending Billing. It also gives us visibility of dropships that have NOT shipped, so we have something to follow-up and chase the vendor on. It's an extra step, but prevents some dropship order from slipping into the abyss and having an irate customer. Of course, your environment and process may be different.

I get that part but doesn't that mean we have to own the inventory at our location?

You don't have to own/possess it, but it does have to debit/credit accounting GL accounts at that step, even if physical inventory isn't phased.

hmm so when do we receive those items? or putting like a crazy high number so it never goes in negative?

You don't receive those items. They don't interact with your NetSuite inventory.

yeah but item fulfillment needs a location and if I don't have enough on hand it can go in negative

The IF doesn't interact with your inventory.

Yeah I just realized that

The drop ship functionality has it limitations. The revnuw comes from when you invoice. The cost though, is from the vendor bill (not the IF as for other normal stock transactions). That means that you can end up with a mismatch in revenue/cost for the month, if the vendor bill is dated in the month after your invoice.