Hey Ray,
A Dummy object is just an invisible object. You can control its Anchor Point, the Scale and it's Position, and even have Rotation about a point. But the dummy object is not seen during playback. What is it good for? It makes it easier, at times, to act as a Parent for Objects without being seen. A Parent Object is like playing follow the leader, but the leader is invisible on the screen during playback, but the Objects can see and follow it if they are made a Child of it.
Say that you want to have an object, or group of objects, circle around a point on the screen. You would create the Dummy and have it rotate at that point on the screen. Then you would make all the Objects a Child of that Dummy object. That Dummy now becomes the Parent and the actions it takes the Child objects will follow. The Parent becomes the center of the Childs universe.
A good example was when I made a bunch of fireflies swarm and circle above a frog. All I did was create three different Dummy objects and had several tiny circles of white follow each Dummy Object. Each Dummy was Rotating about a point. I changed the Anchor points over time of each dummy as to make it look like the Child Objects had their own will of movement. It turned out real well and with the Child objects Opacity change over time, it really looked like they were real.
Another example was when I made the solar system. I could not use the sun as the parent for each planet had to rotate around the sun at different speeds and with different elliptical paths. I used a Dummy to direct each planet. This worked out real well.
I do hope you find this info clear enough to answer the question. If not, just reply to this POST. Happy Animating.