From http://autorepair.about.com/library/a/1h/bl483h.htm :

"The dwell is adjusted by setting the points gap to a specified distance at maximum opening. A narrower gap gives more dwell and a wider gap gives less. Taking it to extremes, excessive dwell means that the points close too soon after opening, cutting off the magnetic field collapse before it delivers all its energy. Too little dwell gives the magnetic flux insufficient time to build up to the maximum.

Both conditions give a weak spark which gets even weaker as the engine RPM rises and produces misfiring at normal operating speeds. The dwell, as well as spark plug gap, do have an effect on ignition timing. The later the points open, the later the spark comes and retards the timing. The earlier the points open the sooner the spark comes and advances the timing. That is why timing is the last thing to be set in a tune-up."