To me, dialogue is how you and I really speak to one another - often in short, brief phrases with shortened forms of words - gonna rather than going. It's real and relatable because that's how we actually speak to one another. When something is too formal, with nice lengthy sentences, and proper form for all words, etc. to me that isn't dialogue, unless that IS the character's voice. Most of the time, it won't be.

I would say that, in relation to screenwriting, the dialogue has to have a purpose, and move the story on....all the time, there is not much space for "chit-chat" - which is kind of what conversation is...rambling journeys that we go on everyday but without any real purpose....starting with what we had for breakfast, and then the idiot who ran a red-light down by that bakers where they do those great chocolate donuts, not like the ones from the supermarket, did you see that programme last night...... That is conversation, unimportant chit-chat...great for helping the morning go by, but useless at telling us about the story! I think.....

I think dialogue is a scripted though still natural feeling conversation that enhances the story. A conversation is a random talk which doesn't have to have a purpose.