So, if I enable home sharing on my Itunes, and then log on to my account on his computer I will have access to all our CDs?
Yes, if he shares his iTunes library on his machine, then you can play his music from your machine. If you share your library in iTunes, he'll be able to play your music from his machine. If you both, furthermore, turn on "Home Sharing" feature, then you can both not only play music from the other person's machine, but also drag and drop to copy music to your respective machines.
And he can then use my account- he says he has only downloads podcasts and stuff so he won't \[lose] anything by using my account.
Yes, so for "home sharing" to work, you both log into the same iTunes account, turn on "Home Sharing" and when you're both running iTunes on the same network, you'll see each other's computer right in iTunes. If he doesn't care which account you use, you can then choose the one that works best for the both of you. (If you've bought some stuff, maybe use yours, if neither of you have bought anything yet, then it probably doesn't matter.)
And lastly, the music will be stored on the laptop not on my phone?
Whatever you want. If you're really tight on disk space on your machine, and his machine is always connected to the network, you can just play it from his machine (assuming he's running iTunes as well). If you want to play music even when his machine is not connected (or if you want your machine to effectively operate as a back up the music library), then you'll want to copy it to your laptop. If you want the music on your iPhone (so you can play it wherever you are), you will not only copy the music to your laptop, but also then sync your iPhone with the laptop so that music will be copied onto your iPhone. So, in answer to your question, I assume you'll store a copy on your laptop, and only on your phone if you really want to have it there.