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When a Personal Room is created, an existing Civilian or Soldier will move in (this is viewable by mousing over the zone, an unclaimed/empty room will return the phrase "Personal room" wheras a claimed room will return the name of the Townsfolk who owns it). If there are more personal rooms than Townsfolk, new Immigrants will be more likely to move in.
When tired, the Townsfolk will return to their rooms to sleep, rather than sleeping outside. Sleeping restores 5% of the maximum base hit points.
If you wish to, you can assign a Personal Room to a specific townie by right clicking the zone and selecting "Change owner". You can then proceed to select the target townie's name and the personal room owners will switch.
A Personal Room zone requires at least a 3x3 tiled zone. Decorations will enhance the happiness of the Townsfolk who owns the room.