Dithering is the process to convert a larger bit file to a smaller one. 24 bit to 16 bit.
Dithering should only be used as a last step in mastering. Personally I use the UV-22 plugin as the last insert on my stereo output buss and set it to 16 bit when I am mixing down for a CD.
If you do not dither, the word lengths of the audio files can be truncated (cut off) when you are making a bit change in the export (your files are recorded in 24 bit, export is 16 bit).