[jggimi]

See the sshd_config(8) man page, and read the section on ChrootDirectory and the section on Subsystem.

See the sftp-server(8) man page.

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I have never used ChrootDirectory except with sftp-server. My shell users are granted full shell access.

Here's an example that was once in use on one of my systems:

Subsystem sftp /usr/libexec/sftp-server
Match User carpetsmoker
        ChrootDirectory /home/carpetsmoker
        AllowTcpForwarding no
        ForceCommand internal-sftp