SAP is transactional system. This means, dialog users most of time are idle from system's point of view. Occasionally some user click a button or do any other action that requires response from the server/system. In this moment, SAPgui/webdynpro/... connects to the instance server the user is logged in (application server) and requests required data from it. There is another process called dispatcher, that the sapgui/webdynp is tolking to. Dispatcher is "father" of all the workprocesses and it remembers what your sapgui/webdynp want from the system, checks if there is currently some free dialog workprocess, and if it is, forces the work process to do the work for the user. If there is no free dia wp, request is just waiting in the queue till there is one. After wp processes the request and grabs data for the client, it is again ready to fulfill request of another user in the same system. Dispatcher sends the data back to the user.
This communication is one transactional/dialog step, and should be completely processed in one second to be comfortable for the user.
So work of dialog work process is to quickly fulfill request of "random" user in the system.
There are more types of work processes, dialog and background are only some of them. Described above is only dialog wp. Background wp has some differences, but basically it works similarly.
Number of different wp is of course configurable (not of all types, some of them are required to be only once), limitation is only hw afaik, but there are guidelines how many wps you need for how many users. Good transactions to monitor wps are SM66 and SM50 or 51
hope now it is clearer
Br
Bohuslav