DIAL stands for Discovery And Launched (I guess "DIAL" sounded better than "DAL"). It also happens that it was created and is maintained by Netflix and YouTube (with input from "a variety of partners"). It's described as a simple protocol that 2nd screen devices can use to discover and launch apps on 1st screen devices. In other words, phones and tablets can use it to launch apps on TVs, set-top boxes and Blu-ray players.
"For consumers, DIAL removes the pain of having to launch the required app on the 1st screen before interacting with it from their 2nd screen," the DIAL website (maintained by Netflix) says. "DIAL does not have any significant impact on the 2nd screen's battery life and the only requirement is that both 1st and 2nd screens are connected to the same home network."
"For device manufacturers, DIAL increases usage of applications on their 1st screen products (TV, set-top, Blu-ray, etc.)," the site says. "For app developers, DIAL helps link their 2nd screen app to their 1st screen app without requiring a manual launch or pairing process by the user."
When one app is running, and another app is launched via DIAL, the device starts the app just as if it would if the app were started on the device itself (or from a remote control, which Netflix compares the protocol to repeatedly).
There is no cost or royalty structure attached to DIAL. As long as you follow the terms, anyone can use it.
GigaOm shares a little on why Netflix and YouTube teamed up:
“We realized in the fall of 2011 that we could create some potentially useful 2nd screen experiences,” Scott Mirer, director of product management at Netflix, told me via email this week, adding:
“At about the same time, we learned that the YouTube team was interested in much the same thing – they had already started to do some work on 2nd screen use cases. And so we approached them on collaborating… We also felt that having two major video services define and promote DIAL would help get it more widely adopted as a common solution to a common problem, vs. taking a proprietary approach. It’s been a productive partnership and we’re confident that we’ll get wider adoption because of it.”
More info in the FAQ section.