On dialogue ...
In my opinion, dialogue serves two main purposes (though it does have a number of smaller uses). The two main ones are:
1. To tell the story and move it along
2. To improve your writing
When a story has much dialogue, it is called "loud"; when a story has little dialogue, it is called "quiet." (Personally, I'd rather read a loud story, but it all really depends.) An example of an extremely loud writer is J.K. Rowling, whose series with upwards of 3,000 pages has maybe two hundred pages where dialogue isn't present. But then there's also José Saramago, a Portuguese writer known for his award-winning book Blindness. He is an extremely quiet writer, with maybe no dialogue at all in his book.
There's nothing wrong with being quiet or being loud. It really matters on the feel you're going for in your story. A darker story may want less dialogue because it will provide a feeling of loneliness and seclusion. A lively story may want more. Again, it depends on what you as the writer want. Great dialogue will make a story a bestseller; good dialogue will personalize your ficition. But bad dialogue will befoul your words and make you look like the amateur that you very well may be. The only way to write good dialogue is to practice it, and write a lot of it.
When writing dialogue you think sounds fake, go back and think about what you're trying to make your character say. Then, pretend you're in your character's situation. Say the information your character must present. Do you hear an enormous difference between the way you speak and the way your character speaks? If so, that may be a good thing. Every one character should have his or her own voice. It'll make him/her appear more real. Try to incorporate some of what you said into your character's dialogue, if it fits.
Also, remember this: Dialogue is clipped. People don't speak in full sentences, reminding each other of the subject. When people in fiction speak of a subject they both know, yet constantly remind each other of the facts, the dialogue is greatly, greatly diminished. Example:
"Bob, did you get me that latte with extra sugar and bit of half-and-half that I asked you for over twenty minutes ago?" asked Mary.
"No, Mare," said Bob. "I'm sorry. I got side-tracked on my way to the kitchen because I saw that someone was having trouble with the copier and I decided to help. Your latte completely slipped my mind."
Of course, Mary didn't believe his lie. They had a rough relationship, and she figured Bob was the farthest thing from a friend. In fact, he hated her. Mary had never even expected Bob to get the coffee; she'd only asked him as a test, to see if he really didn't like her. She had sworn to herself that if he hated her, the only way to make him feel her pain was to kill him.
(That's a terrible example of character development, but just overlook it for now. Mary's clearly a bit paranoid, but other than that ...) informative dialogue is an obvious ploy used by a writer who is lost in their story. Do you honestly think anyone talks like that? No one does. I hope. After reading that, a knowledgeable writer would likely go into a speech about "showing vs. telling." Remember: actions speak louder than words. If you can get a message across in actions, then do. It will have more impact. The above dialogue would be better written like this:
Mary and Bob had a rough relationship, and it wasn't getting any smoother. She knew Bob hated her, and it tore her apart. She had feelings for him — strong feelings — and she didn't know what she was doing to make him hate her. But he did, and it hurt Mary to be hated. In the seventh grade, she had made a voodoo pillow of Becky Sanders — the most popular girl in the world — when she had started a slambook against her. In a completely unrelated incident, Becky's body was found two weeks later, on the side of the tracks. She was sliced to bits, with over forty wounds in her back and chest. Mary didn't think it was such a tragedy. She hated to see people get hurt, but when they had hurt her first she didn't mind them suffering a bit for her. Bob's hate for Mary was proven the other day, when Mary had asked him for a latte:
"Did you get me it?" she asked Bob.
Irritated, he said a quick hell no, and walked away, unaware of the disaster that he had just brought upon himself.
Now, that's not a masterpiece, and it's on the quiet side, but can't you see how it works better? I informed you, the reader, of the situation, and then I wrote realistic dialogue, because I didn't have to fill the reader in on the situation through the character's words. Try it.
Tags are trivial. They mean barely anything. Most writers fear tags and the way they sound, but they shouldn't. When a reader is going over dialogue, they are paying little attention to the tags. He said, she said work best, and it seems that some writers try to over-compensate for their bland dialogue by making their characters "chuckle" dialogue. Raders barely notice tags, especially he said, she said, so don't try to make characters snort something. He said, she said work just fine. Every now and then you can mix it up with "screamed," "yelled," etc, because they may be more effective, but don't be too worried about tags. Examples:
"When are we going to the movies?" questioned Sarah.
"Don't know," interjected James.
"It's got to be soon," stated Robbie.
"Any minute now, I guess," Laura supposed.
As you can clearly see, the over-use of descriptive tags decreases the quality of the (already lacking) dialogue. Here's that same example rewritten:
"What time are we going to the movies?" Sarah asked.
"No idea," said James.
"It's got to be soon," Robbie said. "If I don't leave now, my mom's making me babysit."
Sarah said they should leave now, then, and they all agreed that was best.
Avoid writing cliches in dialogue like the plague. I mean cliches as in "gonna," "wanna," "shoulda," "coulda," "cuz," etc. It just looks and sounds bad. Don't do it. (EDIT: I may have exaggerated. These cliches can work differently in different characters' mouths.)
Hope this helped, and Gringy would like me to add that he's still alive.