What does Dither do in Cycles and what's the right value to set?
Dithering is a post-processing step that reduces the banding caused by insufficient bitdepth by adding some controlled noise to the image.
Dithering set to 0:
Dithering set to 1:
With Blender's internal renderer, I almost always set it to 1 to avoid banding, but with Cycles, it's less useful because Cycles introduces its own noise anyway.