Microsoft Knowledge Base Article 815065 contains the following summary and introduction:
SUMMARYThis article describes what a dynamic link library (DLL) is and the various issues that may occur when you use DLLs.
Then, this article describes some advanced issues that you should consider when you develop your own DLLs. In describing what a DLL is, this article describes dynamic linking methods, DLL dependencies, DLL entry points, exporting DLL functions, and DLL troubleshooting tools.
This article finishes with a high-level comparison of DLLs to the Microsoft .NET Framework assemblies.
INTRODUCTIONFor the Microsoft Windows operating systems that are listed in the "Applies to" section, much of the functionality of the operating system is provided by dynamic link libraries (DLL). Additionally, when you run a program on one of these Windows operating systems, much of the functionality of the program may be provided by DLLs. For example, some programs may contain many different modules, and each module of the program is contained and distributed in DLLs.
The use of DLLs helps promote modularization of code, code reuse, efficient memory usage, and reduced disk space. Therefore, the operating system and the programs load faster, run faster, and take less disk space on the computer.
When a program uses a DLL, an issue that is called dependency may cause the program not to run. When a program uses a DLL, a dependency is created. If another program overwrites and breaks this dependency, the original program may not successfully run.
With the introduction of the Microsoft .NET Framework, most dependency problems have been eliminated by using assemblies.