In Dark Souls for the PS3 and Xbox 360, souls are essentially your experience used for leveling up. Souls can be rather hard to come by at times, but fortunately there is a really good place fairly early in the game to farm a lot of souls over and over.
After you defeat the Taurus Demon, you will come to a bridge with a large Hellkite Dragon at the other end, and several enemies waiting to kill you on the bridge.
When you step onto the bridge, immediately start running on the far left side to avoid a few of the arrows from the skeletons. Right as you pass the first group of skeletons, quickly roll into the crevice on the right with the stairwell leading down to avoid the brunt of the fire from the dragon. You will still get hit but it shouldn’t kill you if you were far enough into the opening, and make sure to roll down the stairs to get rid of the flames.
You’ll notice that the fire has killed all of the enemies on the bridge however, and you received 300 souls from their death, which is the key to this exploit.
Go downstairs, and look for a ladder that you can kick down to gain access to The Last Bonfire. Rest, and go back up to the top. If you step out of the stairwell onto the bridge, you’ll see that the enemies have respawned, and the dragon will breathe fire again. Make sure to quickly go back into the opening with the stairwell so you don’t die, and roll again to get rid of the flames.
Another option if you have a bow and a lot of arrows is to snipe the dragon’s tail from the level directly below the bridge. You’ll find an opening below on the right where you’ll see the dragon’s tail dangling down. When you hit the tail with an arrow for the first time, it will breathe fire on the bridge killing all of the enemies above, and you’ll gain the same amount of souls without taking any damage.
Repeat this process as many times as desired.