The で particle indicates where the action takes place. Take a look at this example: きっさてん　で　コーヒー　を　のみます. (きっさてん = cafe. で = location marking particle ‘de’. コーヒー = coffee. を = direct object marking particle ‘wo’. のみます = polite present tense verb ‘drink’.) In English, this sentence would mean, ‘[I] drink coffee at a cafe.’ The で particle came after the word ‘cafe’. This indicates that the きっさてん or the cafe is the location where the coffee drinking took place. Here, the で particle can be translated as the English preposition ‘at’.

However, the で particle can also be translated as the English preposition ‘in’. Take a look at this sentence: わたし　の　へや　で　ねます. (わたし = I. の = possessive marker. へや = room. で = location marker. ねます = sleep.) In English this sentence can be translated as ‘I sleep in my room’. Since the で comes after the word for room (へや), the ‘room’ is where the sleep takes place. One other difference that I’d like to point out is that で came before a verb (ねます) in this sentence, but in the previous sentence it came before a noun (コーヒー).

Since で marks the location of where the action took place, it’s not unusual to see both で and the を particle (which links both the object and the action together) in the same sentence.  きっさてん　で　コーヒー　を　のみます is an example of having both the  で and the を particle together. Just because you have a で particle doesn’t mean that you have to have the  を particle in the same sentence. A sentence like this わたし　の　へや　で　ねます is also acceptable. With the previous sentence you’re drinking the coffee so you need that direct object particle. However, it doesn’t make much sense to say you’re ‘sleeping the bed’.

Sometimes you can even respond to a question like どこ　で　べんきょうしますか with a response like としょかん　で. (どこ = doko. で = location marking particle. べんきょうします = polite present affirmative verb ‘study’. か = question marking particle. としょかん = library.) In English the question  どこ　で　べんきょうしますか would mean something like ‘Where do you study’? The response としょかん　で would mean ‘In the library’. Of course a reply like としょかん　で is not a complete sentence, but people use this type of phrase when it is obvious to both the speaker and listener as to what the context of the conversation is.