A dielectric is an electrical insulator that can be polarized by an applied electric field. When a dielectric is placed in an electric field, electric charges do not flow through the material as they do in a conductor, but only slightly shift from their average equilibrium positions causing dielectric polarization. Because of dielectric polarization, positive charges are displaced toward the field and negative charges shift in the opposite direction. This creates an internal electric field which reduces the overall field within the dielectric itself. If a dielectric is composed of weakly bonded molecules, those molecules not only become polarized, but also reorient so that their symmetry axis aligns to the field.
While the term "insulator" implies low electrical conduction, "dielectric" is typically used to describe materials with a high polarizability. The latter is expressed by a number called the relative permittivity (also known in older texts as dielectric constant). The term insulator is generally used to indicate electrical obstruction while the term dielectric is used to indicate the energy storing capacity of the material (by means of polarization). A common example of a dielectric is the electrically insulating material between the metallic plates of a capacitor. The polarization of the dielectric by the applied electric field increases the capacitor's surface charge.
The study of dielectric properties is concerned with the storage and dissipation of electric and magnetic energy in materials. It is important to explain various phenomena in electronics, optics, and solid-state physics.
See the above Wikipedia/Dielectric link for diverse and important information on various forms of polarization.