Superluminous supernovae (SLSNe) of Type Ic have a tendency to occur in faint host galaxies which are likely to have low mass and low metallicity. PTF12dam is one of the closest and best-studied superluminous explosions that has a broad and slowly fading light curve similar to SN 2007bi. Here we present new photometry and spectroscopy for PTF12dam from 200-500 d (rest frame) after peak and a detailed analysis of the host galaxy (SDSS J142446.21+461348.6 at z = 0.107). Using deep templates and image subtraction we show that the light curve can be fit with a magnetar model if escape of high-energy gamma rays is taken into account. The full bolometric light curve from -53 to +399 d (with respect to peak) cannot be fit satisfactorily with the pair-instability models. An alternative model of interaction with a dense circumstellar material (CSM) produces a good fit to the data although this requires a very large mass (˜13 M_⊙) of hydrogen-free CSM. The host galaxy is a compact dwarf (physical size ˜1.9 kpc) and with M_g = -19.33 ± 0.10, it is the brightest nearby SLSN Ic host discovered so far. The host is a low-mass system (2.8 × 10⁸ M_⊙) with a star formation rate (5.0 M_⊙ yr^-1), which implies a very high specific star formation rate (17.9 Gyr^-1). The remarkably strong nebular emission provide detections of the [O III] λ4363 and [O II] λλ7320, 7330auroral lines and an accurate oxygen abundance of 12 + log (O/H) = 8.05 ± 0.09. We show here that they are at the extreme end of the metallicity distribution of dwarf galaxies and propose that low metallicity is a requirement to produce these rare and peculiar SNe.