Oooooh. Marsha mentions Graywolf Press' Art of Series (link is to Graywolf's full catalogue, but I trust with your advanced abecedarian skills you can find the series) in the post below. Let me add a plug for Charles Baxter's The Art of Subtext.
So, Dialogue is very rarely people talking directly and clearly about what they think and how they feel. People talk around their feelings and meanings, they talk above, across, behind, beneath, besides them. Occasionally they talk near the truth. But rarely, rarely do they talk about it. Dialogue is a dance--and at its best it's characters dancing around trying desperately to avoid getting their feet stuck in the thick, gooey layer of subtext beneath them.
What matters, then, is the three dimensionality of the scene--that what we have is not just the words that make up information the characters are communicating, but a full, whole scene where the characters are moving in space and breathing in the thick, subtext-laden air. Baxter refers to this as staging:
Staging in fiction involves putting characters in specific strategic positions in the scene so that some unvoiced nuance is revealed. Staging may include how close or how far away the characters are from each other, what their particular gestures and facial expressions might be at moments of dramatic emphasis, exactly how their words are said, and what props appear inside or outside...Staging might be called the microdetailing implicit in scene-writing when the scene's drama intensifies and takes flight out of the literal into the unspoken...It shows us how the characters are behaving, and it shows us what they cannot say through the manner in which they say what they can say.
Everything I say about dialogue goes for thoughts, too--Marsha's admonition to STOP RUMINATING isn't just a pacing issue, but an accessibility one. If we know everything the character thinks, if we know what motivates her every action, we have no real need to engage with that character. It all becomes information, and keeps our engagement at the surface level of the literal words. When someone has an internal monologue heavy scene, I often suggest they write it as a playscript, so the only way to communicate is through dialogue and action. To further twist and abuse the dance metaphor, then the dialogue becomes the carefully choreographed steps, and the subtext the music.