Dihedral effect is how the airplane responds in roll in the presence of sideslip. An airplane is in a sideslip when the relative wind is coming from the left or right of the airplane's nose. Let's say you step on the left rudder pedal. The airplane yaws nose-left, creating a right sideslip because the relative wind is now coming from the right of the plane's nose. If the airplane then rolls to the left, it exhibits a positive dihedral effect under these conditions. If it rolls right, or into the sideslip, it has a negative dihedral effect. If it doesn't roll at all in the sideslip, we call the dihedral effect neutral. So, when an airplane rolls away from the sideslip, it exhibits a positive dihedral effect.
High-wing airplanes have a natural positive dihedral effect because of where the wing attaches to the fuselage. Picture your favorite high-wing airplane in a right sideslip. The relative wind approaches the wing-fuselage junction from slightly right of the airplane's nose. Instead of flowing parallel to the fuselage as it would in a zero sideslip condition, the air flows into the corner formed by the wing's lower surface and the fuselage where it "piles up." This piling up of air forces some of the approaching air up and over the wing. The air that's forced up results in a higher angle of attack at the inboard portion of the wing. The higher angle of attack means more lift is generated by the right wing in a right sideslip, and the airplane rolls left.
The opposite effect takes place at the inboard section of the wing on the downwind side of the sideslip, the left wing in our right sideslip example. The air rushing across the windshield and cowling experiences a downwash as it approaches the leading edge of the left wing's inboard section. The downwash results in a lower angle of attack and less lift, which also tends to roll the airplane left in a right sideslip.
By now you may be reasoning that this upwash/downwash effect on the angle of attack should also apply to the low-wing airplane, and you'd be correct. Picture a low-wing airplane with no geometric dihedral. The right sideslip causes a downwash and decrease in angle of attack at the right wing's inboard section. It also causes an upwash and increase in angle of attack at the left wing's inboard section. Both situations tend to roll the airplane right during a right sideslip, a negative dihedral effect.
Now let's add some geometric dihedral to our low-wing airplane. Starting with the relative wind right on the airplane's nose, you can see that the angle of attack is the same across the wing. Then step on the left rudder pedal enough to shift the relative wind a few degrees to the right of the nose. The air approaching the right wing is now striking some of the bottom of the wing due to the geometric dihedral. The result is a higher angle of attack, more lift, and a left roll, positive dihedral effect.
Air approaching the left wing during our right sideslip example strikes more of the top of the wing. The result is a lower angle of attack, less lift, and a left roll--again positive dihedral effect.
Because the high-wing airplane has an inherent positive dihedral effect, less geometric dihedral is necessary to achieve the desired dihedral effect. Low-wing airplanes generally have at least twice as much geometric dihedral as their high-wing counterparts.--Ed Kolano