Short answers, pulled from the story.
The term originated in German-speaking regions before 1800 to describe a lecturer who received fees directly from students instead of a university salary. These independent teachers operated outside the standard faculty payroll system and earned their living through student payments for lectures they delivered on their own authority.
Universities grant the Priv.-Doz. title only after an applicant completes a habilitation process which demonstrates excellence in research and teaching within a specific subject area. A candidate must prove their ability to teach independently at the highest level without holding a full professorship while meeting strict criteria set by the conferring faculty.
More than 5,000 honorarium Privatdozenten worked at German universities without a salary in 2012 under most local regulations that provide no direct remuneration agreements with their conferring institutions. Their financial survival depends entirely on student fees collected from courses they choose to offer or externally funded research projects.
The European Privatdozent status compares closely to an Associate Professor position in the United States and aligns with the role of a Senior Lecturer found within British university systems. Unlike North American Associate Professors these titles do not always link to tenured academic positions nor imply the responsibilities of a Principal Investigator leading major research teams.
Junior professorships were introduced in 2002 providing a new route to a professorship without habilitation which changed the landscape of German academia by removing the habilitation as the gold standard qualification. Before this shift most university professors appointed between 1900 and 1968 held the title through their completed habilitation.