A Dimension is a physical space in which entities exist.
Dimension 0 is visible to all in dimension 0 and above
All dimensions above 0 can only see entities in their dimension + dimension 0
All dimensions below 0 are private dimensions and can only see the entities in their dimension.
Player A is dimension 0, Player B in dimension 1, Player C in dimension 1, Player D in dimension 1337 and Player E in dimension -3.
All player except Player E will see Player A.
Player E won't see anybody else, as hes in a lonely private dimension.
Player B can see Player C and the other way around too, both can see Player A.
Player D can only see Player A.
Often used for Minigames, Interiors, Multiple maps at the same time on the server, where each map is a dimension.