The purpose of the dictionary tool dialog is to list the words of the EDICT dictionary that match your search criteria. This is useful in many situations, e.g. when translating a word from English to Japanese or vice versa, list all the kanji combinations that contain a given kanji, and translate an entire text (e.g. a page from the web).
The dictionary tool window can be opened manually and used for manual queries. The dictionary tool window is also opened for automatic queries from several other points in the software.
The search results, which can be filtered in many ways, are a starting point for automatic queries in the tool dialogs KanjiInfo and KanjiSelect.