From what I can tell from experience, when using the dictionary the AI is not really aware it exists, but if something prompts it's use it will be used.

For example let's consider the scenario where dictionary entry "Shotguns" state "Shotguns are the latest trendy weapon".

If you prompt, that your character decided to buy the latest trendy weapon. The AI may not know that the weapon was supposed to be the "Shotgun".

But if you prompt that your character decided to buy a "Shotgun". The AI may prompt that your character bought the "Shotgun" "which is the current trendiest weapon".

The dictionary is sort of like a direct call for information. If the trigger word(s) is called by your action or the AI event it will pull the information

You can use this to your advantage when creating worlds by including those triggers in descriptions for things like entities, locations or stats. Ideally you would include dictionary entries only when they are relevant to the current scene unless you're wanting to compartmentalize descriptions or use the same reference across multiple entities. 

To use xMYx's example, you would only include "shotgun" in the description of a weapon shop, or an entity that wields it, but not in the general world prompt. 

Basically, you can create an entire glossary of dictonary terms, but they will only be referenced if you force the trigger words somewhere else.

That's at least been my understanding of it's use so far.