Authors Arianne "Tex" Thompson and Mark London Williams gave a panel on writing good dialogue. Here is some of their advice.
Mark London Williams. In emotional situations, the characters will often be indirect.
Tex Thompson agrees. When a horse approaches an object, it does not go straight to it, does not make a beeline. That's a predator move. A horse comes up at an angle to get a better view at an object. Similarly, good dialogue does not say something directly. It makes several approaches, several passes. It suggests (for smart readers to get), and then confirms, so that everyone could get on the wagon.
Specific dialog problems
Tex Thompson addresses the audience. How many of you had in your own writing struggled with a scene where you had a dialogue bouncing back and forth for pages ans pages, but not getting to the point?
She then asks Mark London Williams: What advice would you have to overcome this?
Mark London Williams. Start a scene as late as possible. Start with at teacup already smashed on the floor, and a woman says to a man: "I can't believe you did it! You always do this!" -- now the readers are forced to wonder: he did what? What does he always do? Smashes teacups? Hurts her feelings?
Tex Thompson gives another example. Let's say the dialogue starts with a line: "So the school called again today". Now the readers want to read further, because they have a sense that someone is in trouble, and they are wondering who did what.
Tex Thompson. Instead of "he said, she said", put in a sentence describing action.
"You always do this." She picked up a broken piece.
There is a rule: one paragraph for one actor.
"You always do this." Her face was calm, but under the table she was picking at her 500 hundred dollar French manicure.
The discussion also covered dialects, accents, slang and vernacular. One of the general advices on that topic is: avoid writing out a dialect or an accent phonetically as it sounds (like "ze" instead of "the" in a stereotypical French character's speech), because that quickly becomes grating and annoying. In small amounts it can be OK, just don't write entire paragraphs like that. I don't remember most of other advice, but I remember these interesting observations:
Where more than one language is spoken, the lower-prestige language contributes the grammar, while the higher-prestige language, the vocabulary. This happened, for example, to English language after the Norman conquest of England, when French became the language of the court, while English remained the language of the peasantry.
Similarly, the names for raw foods come from the native / lower-prestige language (cow, pig), whereas the names for cooked food come from the higher-prestige language (beef, dessert).