Dry hopping is meant, as far as I understand it, to improve primarily the hops aroma in a beer. It may slightly impact flavor but I don't know for sure. It is typically done with hop-heavy beers like IPAs. I'm sure you can dry hop anything you want to see the effects. Basically, you toss some hops into the beer before bottling/kegging. I plan to dry hop a Citra IPA for 5 days, then cold crash from day 5 to day 7 then keg. I'll dry hop with one ounce of cascade whole leaf hops.
Heck, I talked to a guy at my last club meet who "dry peppered" his jalapeno saison. Was an interesting, but appropriate, use of the term for sure.