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You can compare a Premium domain name to a Premium shop location in a busy town centre; These Premium shop premises normally demand the highest prices due to their busy location.
A Premium Domain name is a term also associated with a internet domain name that describes a service or product exactly without the customer having to look at the website in question, for example if you had a business that repaired ovens then the best possible domain name would have to be ovenrepairs.co.uk as this tells potential customers that you repair ovens.
Premium Domain names look great on any type of advertising – shorter domains get more type-in traffic as they are much easier and quicker for people to type in. Lots and lots of well known companies are using Generic Domain names to advertise their website, take a look at RegTransfers that own numberplates.co.uk and Terratec who own plantpots.co.uk.