The big idea
Dialogue--characters talking--is the spice that can make a good story become a "WOW!" story. It brings a story to life. It makes the difference between hearing ABOUT what characters are saying and actually having them say it. It makes everything more immediate.
The Bad News
There are about twelve zillion rules about punctuating dialogue.
The Good News
You can write pretty good dialogue if you're willing to learn and follow just four of those rules.
How to do it
Here are the four rules:
Put quotation marks around anything someone ACTUALLY SAYS.
"Stop!" screamed Bob.
Not "Bob told people to stop."
Not "Stop! screamed Bob."
Not Stop! "screamed Bob."
"Why should I stop?" asked Suzy.
Not "Suzy wondered why she should stop."
Not "Why should I stop? asked Suzy."
Not Why should I stop? "asked Suzy."
Make a new paragraph each time you switch speakers.
Even if the "he said" phrase comes before the quote.
Even if it means that your paragraph is one word long--that's okay in dialogue.
Change periods at the ends of quotes to commas IF THE QUOTE IS FOLLOWED BY A "HE SAID" PHRASE.
"You're standing on my foot."
becomes "You're standing on my foot," said Bob."Geez, I'm sorry."
becomes "Geez, I'm sorry," said Suzy."Get off my foot!"
becomes "Get off my foot!" shrieked Bob.
(Remember: exclamation marks don't change.)"Did you say something?"
becomes "Did you said something?" asked Suzy.
(Remember: question marks don't change.)
Get a good balance of dialogue and narrator stuff. Dialogue should never take over--narrator stuff can help the reader visualize what is going on in your story.