There is a widespread custom to light on each night of Hanukah an additional candle, called the "Shamosh," after one lights the obligatory Hanukah candles. On the fourth night of Hanukah, for example, one would light the four required candles and then light a fifth candle as the "Shamosh." This candle is placed on the Menora, a bit higher or lower than the other candles, in order that it can easily be identified as a separate candle, and not be misconstrued as one of the Hanukah candles.
The custom among Sepharadim is not to use the "Shamosh" to light the Hanukah candles. Instead, a separate candle is used to light the Hanukah candles and the "Shamosh." This is contrast to the practice of the Ashkenazim, who first light the "Shamosh" and then use it to light the Hanukah candles.
One should light the "Shamosh" regardless of where he lights the Hanukah candles, whether he lights indoors, outdoors, by a door or by a window; in either case, an extra candle should be lit as the "Shamosh."
There is a custom among some Jews of Syrian descent to light an additional candle – besides the obligatory Hanukah candles and the "Shamosh" – to commemorate a miracle that happened to Syrian Jews one year during the time of Hanukah. Those who follow this custom should light the extra candle only after lighting the obligatory candles and the "Shamosh." Preferably, they should also recite "Hanerot Halalu" and the verses customarily recited after candle lighting before lighting the additional candle. Furthermore, this candle should not be lit in the Menora itself, and should rather be positioned somewhere next to the Menora.
Summary: One should light an additional candle – the "Shamosh" – each night of Hanukah and place it higher or lower than the Hanukah candles. Sepharadim do not use the "Shamosh" to light the Hanukah candles. Some Syrian Jews light an additional candle, besides the "Shamosh," to commemorate a different miracle. This candle should not be placed in the Menora, and should be lit only after the entire procedure for the Hanukah candle lighting has been completed.