in short, we simply graph her countertpart of y = 7, and then we test a point for "true" or "false" for that region.
say for example the point ( 3, 5 ), meaning x = 3, y = 5
y < 7
5 < 7
is that really true? 5 smaller than 7? yeap, so that region is the "true" region, and is the region we shade.
the line in the graph is a dashed one, because it does NOT include the points at the border, y < 7, "y" is less, not equals to, but less than 7.
Check the picture below.