As writers, we've all heard the lesson of "show, don't tell" ad nauseum. We've dispensed and taken this advice throughout our writing lives, not to mention our drafting and revision process.
Example of telling: I opened the oven door to discover that I'd burned the roast. It was black and unrecognizable.
Example of showing: Marcus' nose emerged from behind the book he was reading, and crinkled. "What's that smell?" Just then the scent of smoldering sandpaper hit me. I raced to the kitchen, yanked open the oven door, and was assailed by a cloud of putrid grey smoke before pulling out the boulder formally known as my roast.
Ok, so that's a little wordy. But you get the idea. Showing involves the senses. It uses active voice and puts the reader courtside rather than in the bleachers seats.
Dialogue is not only a great tool for showing vs. telling, but also for revealing the various layers and aspects of your characters. In other words, what our characters say reveals who they are.
Consider this exchange between Devin and Andi during their first tutorial in Faking It. I'm deliberately taking out all the narration, but leaving in one direction of nonverbal communication.
DEVIN: What kind of music do you like?
ANDI: Beatles, Hendrix, Clapton, Nat King Cole, Diana Krall, Norah Jones, John Mayer...
(Devin glares at Andi and cocks an eyebrow.)
ANDI: I like guitars and pianos.
DEVIN: What kind of music makes you feel sexy?
ANDI: I'm not sure. I've never thought about it.
On the surface, this looks like really simple dialogue. One character getting to know another character, perhaps. But in the context of the rest of the scene, so much more is happening. For one thing, Andi and Devin are having a miscommunication, revealing that they don't know each other and are far from the point of reading each other's minds and finishing each other's sentences. Devin is asking the question not in a social way, but as a teacher, and assumes Andi gets the context. But Andi has missed the purpose of the question (hence the look he gives her). It reveals her disconnect with the subject of sex as well as with her own sexuality.
Additionally, the reader learns something about Andi that Devin doesn't yet know. Andi's musical preferences (at least in her answer) are mostly the product of her brothers' influence (one is a rock guitarist, the other a jazz pianist). And it's interesting that she doesn't explain this to Devin but rather declares she likes the instruments. We see that the strong connection to her brothers is special but has also been overbearing at times. We also see that she's withholding information from Devin.
Rhetorically speaking, the Socratic method is at work here (and forgive me for defying everything I teach my students and quoting Wikipedia, but it's convenient and defines it well): "a form of inquiry and debate between individuals with opposing viewpoints based on asking and answering questions to stimulate critical thinking and illuminate ideas." This is probably one of the reasons why dialogue so appeals to me as a novelist as well as a rhetoric geek. I'm all about the peeling back the layers, the getting to the heart of the matter, the quest for meaning, and ultimately, truth. I'm all about using argument and persuasion to get one person to see the other person (or perhaps themselves) in a way they've never seen before.
Besides, sometimes it's downright fun, like this exchange between Devin and Andi well after they've gotten to know each other (again, minus the narration):
ANDI: I absolutely adore the Impressionists.
DEVIN:You what? You adore the Impressionists? No. You can't adore them. No one adores the Impressionists.
ANDI: Why not?
DEVIN: You just don't. You--no one adores them. It can't be done.
ANDI: What the hell are you talking about?
DEVIN: The Impressionists are not "adorable." Things that scamper are adorable. Fluffy bunnies hopping in meadows. Little dogs with knitted sweaters. Those little hats that newborns wear. Baby shoes are adorable. Not Impressionists.
DEVIN: You don't "adore" men who cut off their ears. You don't "adore" men who eat lead-based paint. Men who refused to compromise themselves or their work, even when it meant depriving their families of food. Men who kept mistresses. Who died poor and alone and bitter. There's something much bigger happening in these paintings, something way beyond adoration.
I love everything about that exchange (and there's more, but why give away my best stuff?) -- the rhythm, the humor, and the style (another post altogether); and yet again, there's something bubbling under the surface.
This time do your own dialogic analysis and tell me what you see.
If dialogue is not your strong suit, try a simple exercise of putting two people with opposite traits, opinions, backgrounds, etc. in a room together (better yet, have them get stuck in an elevator) and see what they have to say. Leave out the narration. I'll bet you'll be surprised what they reveal.
I also use dialogue to help me when I'm struggling with a character's motivation. In that case, the dialogue is usually between me and the character.
Overall, have fun with dialogue. Explore. And most of all, listen.