What is the concept of hoolol in Sufism?

What is the concept of hoolol in Sufuism? From my understand it is the concept that that Allah dwells in the creation? This to me opens the door to great forms of shirk as this seems a concept from Hinduism. As i have herd such statements among the sufis : Ibn Arabi said, "العبد رب و الرب عبد" or "al-abd-u rabb-un wa-r-rabb-u abd-un" (the slave is the lord and the lord is the slave)." In my understanding Allah resides above al-arsh : The Most Merciful [who is] above the Throne established.(Quraan 20:5) This to me is a concept very far from Islam and the tawheed of Allah. Pleases help me to understand this concept and its validity as this is very confusing to me.