It's just what it sounds like--you put the fish directly into FW (match temp and pH as best you can) for a prescribed time. The FW will kill external parasites on the fishes skin and gills, and the short amount of time (typically less than 10 minutes) isn't harmful to the fish in the long run.
Check a good book--most all of them describe the treatment process, and indicate what's it's good against.
I prefer not to use FW dips--they can be more traumatizing than advertised, and they don't do anything against internal or embedded parsites.