What It Is
Dimensional lumber is lumber that is cut to certain pre-defined sizes. This type of lumber is sawn, planed, and smoothed (though not always) to make it immediately ready for building applications.
Is All Lumber Dimensional?
For the average consumer, yes. So, it is redundant to say dimensional lumber, because all lumber you will buy at Home Depot, Lowe's, or other home improvement or hardware stores will be already cut to pre-determined sizes.
Common Sizes: Nominal vs. Actual
The most common type of dimensional lumber is the 2x4 (two-by-four). Due to the thickness of the saw, the 2 x 4 is not 2 inches wide and 4 inches deep but is 1.5 in × 3.5 in (38 mm × 89 mm).
So, a 2 x 4 is nominally two inches by four inches but is actually 1.5 inches by 3.5 inches.
When we say that a board is "nominally" 2 inches by 4 inches, in essence, we are saying we have given a board a certain name, but this name does not reflect the board's physical sense.
Dimensions are only given to the width and depth. Thus, a 2x4 board can be 8 feet long, 10 feet long, 12 feet, and so on, but the length is never figured into the dimensions.