A Dialog is a single two-way interaction within a Conversation. A typical example of this is that your Virtual Human asks a question, and the consumer provides an answer in response.
A Conversation consists of a sequence of possible Dialogs, i.e. something that the Virtual Human may say, followed by the ability for the user to respond in some specific way. Once a Dialog has been completed, the Virtual Human moves on to the next Dialog, unless directed elsewhere by an Action.