A dialogue is any 2-way communication between two persons or within a group.
The best writing shows rather than tells. Dialogue, in part, can carry the burden of "showing" many of the qualities, traits, faults, and even the physical appearance of each character.
"You didn't tell me Kathleen had such striking red hair," Colleen remarked backstage.
"She got it from a bottle," Helena whispered, "although she'll tell you she looks 'just like my grandmama from County Downe!". With that, neither could stifle their snickers, despite knowing Kathleen stood only feet away behind the curtain.
"What's she doing out there, anyway?"
"Probably thinks she's the next star on Broadway," Helena answered, as she stuffed her tights and dance clothes into her backpack. "Let's get going."
"No, I want to stay. Maybe Kathleen will 'channel' her 'grandmama'," Colleen replied deviously. Colleen peered around the red heavy curtain backstage, her black hair gleaming under the dim lighting. She expected to see Kathleen, all 100 pounds on her 4'8" frame, lithely moving about the stage.
"What's she doing," Helena asked, edging forward to peer over Colleen's shoulder but Helena wasn't as tall as her dance friend and couldn't see a thing.
Colleen patted the curtain closed and backed away quietly, "Nothing. She's sitting cross-legged in the middle of the stage, crying."
From that short dialogue, we know hair color of two; heights of two; that the setting is a stage; three dancers, two of whom are ready to leave; one who's crying onstage; and that there's some sort of envy, jealousy, or conflict between Kathleen and the other two. As dialogue and narrative continues, we should learn more about "the conflict" and why Kathleen is crying.