Placement of chillers

Hi all.
New to chillers. Just like to know a couple of things. After getting a chiller, where would be a reccomended place to place it? Can i place it in my tank cabinet? or is it advisable?
And lastly, the 1/2, 1/3, 1/4 hp thing ah.. what is it all about?
I know hp = hosepower. but what does the number like 1/2 indicate? thanks.!