Yes, you hammer a sharpened dowel all the way through the cakes and boards all the way down through the base cake board. For extra security, i make my base cake board at least 1-inch thick. Most of the time, I achieve this by gluing a smaller board to the underside of the main board. It actually serves two purposes – extra holding power for the center dowel AND space to get your fingers under the cake!
Some people like to use a dowel that sticks up a few inches through the top of the cake so it can be removed once it’s at it’s destination. I never do it that way. The top of my center dowel is an inch or two below the top of the top tier.
As funfetti said, you can cover the hole with icing or decoration, or whatever. However, if the top of the cake needs to be pristine, you can cut a hole in the top tier’s board just big enough for the dowel to slide through easily(before putting the cake on it). Stack all but the top tier, hammer in your dowel, then thread your top tier over the dowel. Make sure you use enough icing glue under the top tier since the board will not fit snugly around the dowel.