The first thing you need to know and remember is that no matter how strange it may look on the outside, Dissociation Disorders (DD) are not some form of insanity. In fact, pretty much everyone dissociates at some time or another, and dissociation is a normal childhood developmental cognitive process. This is a natural, normal, necessary process which is built into the human psyche. In the mildest forms, dissociation includes the way people can "zone out" when they are bored or totally lose themselves in a daydream or a book or a movie, or concentrate on a project so fully that they lose track of time or their own body signals (such as hunger).
In the most severe form, chronic dissociation may take the form of poly-fragmented Dissociative Identity Disorder, which, until recently, was known as Multiple Personality Disorder (and is in no way related to nor is it the same as schitzophrenia, which is a specific brain illness and is chemical and biological in nature). There is, in fact, quite a broad spectrum of dissociation, and that's even a "sliding" scale, as some people experience more or less dissociation from day to day depending on any number of factors (stress seems to be a big one).
Noticible or profound dissociation occurs as a result of repeated trauma and is extremely closely associated with Post Traumatic Stress Disorder. Soldiers are known to suffer from various Dissociation Disorders (as well as PTSD), as are survivors of natural disasters, wars, and other traumas (such as plane crashes or explosions, just as examples). The human psyche, being what it is, distances itself from the trauma in any number of ways, including keeping a memory but no feeling, or "partitioning" off feelings into compartments inside the mind, by simply blocking out all memory of the event, or by an infinite number of other possibilities. Dissociation is a very personal sort of thing; every mind is unique, and dissociates in its own unique way.
People who become chronically dissociative are those who have been exposed to trauma or traumatic stress on a prolonged or severe basis, usually with no way to "escape". Abuse survivors generally fall into this catagory, since, as children, they had no escape from their abuse and so had to find other, creative ways to cope and survive, and sometimes those ways include splitting off "parts" of yourself or creating internal landscapes and alter egos to deal with your pain, or wrapping up your memories in some sort of mental "cocoon" of amnesia or putting up mental walls around yourself or "leaving" your body or who knows what else. For these survivors, the dissociative process was a means of survival and a way to cope with trauma. They're not insane; it's a different kind of sanity.
So, if this is all normal and natural and adaptive, what's the disorder? Well, the condition becomes a disorder when the walls of dissociation are so profound that the person can't function effectively in the world or be at peace inside themselves (this includes amnesia and other confusing, disconcerting dissociative processes that can make the person uncomfortable, sometimes painfully so). The same walls of dissociation that enabled them to survive the trauma become obstacles.
The fact is, however, that even chronic dissociation doesn't have to necessarily be considered a "disorder," and even the DSM-IV notes that "Dissociation should not be considered inherently pathological and often does not lead to significant distress, impairment, or help-seeking behavior." (DSM-IV, page 477). For some people, dissociation is more a "condition" or a "state of being" rather than necessarily maladaptive or otherwise dysfunctional. In fact, there are some cultures where deliberate dissociative states are encouraged (usually as a religious expression).
As for my own study and reflection on the matter, it's certain that dissociation happens all the time in just about everyone. Examples might be driving to work and becoming absorbed in thoughts of the day ahead and you're driving on "auto pilot," not even fully paying attention to where you are or the scenery around you; or perhaps you're walking along thinking intently about something and you don't even see the friend who just said hello to you; or you may turn on the stereo and get involved in a phone conversation at the same time and then suddenly realize you've "missed" the entire album that was playing....
All of these are examples of dissociation, but re-association is almost immediate and practically effortless. Temporary dissociation is often what people call "shock" and is the sort of thing experienced when someone dies or when you're in a car accident or other trauma. You just go numb for a while and feel basically nothing at all. With support and time, the numbness wears off and you re-associate your feelings and integrate your grief or pain or fear.
This, in my opinion, is pretty much exactly what happens with chronic dissociation, but the re-association is not immediate, for reasons of survival and coping and adaptation. The victim goes "away" in any number of different ways (research shows a very close link between chronic dissociation and hypnosis; it is believed that dissociatives created their "walls" or inner worlds by self-hypnosis), finds relief, and then, as the trauma is repeated or the stress continues, this dissociative process becomes habitual. The more profound the abuse, the more profound the dissociation (as a general rule, but that's just a rough guideline).
Dissociation causes traumatic memories to be set aside -- set apart from normal consciousness. Bodily responses, emotions, actions, and memories have little or no relationship to one another. Physical pain is missing from physical injuries. Affect is missing from extremely moving events. And memory may be missing altogether, except for fragments. - Dr. Lenore Terr, M.D.
Therapy for dissociation disorders can be lengthy (estimated 5-7 years of therapy for DID), but the prognosis is excellent (and the less significant or profound the dissociation, the shorter the recovery period required). Breaking down the dissociative barriers takes time, dedication, and work, but significant and life-restoring healing can certainly be achieved.
Well, enough of my unprofessional explanation, which is pretty simplified and doesn't begin to address the huge spectrum and scale of Dissociation Disorders. This is how I understand DD/DID, and how I explain it to people (when I feel the need to explain it at all).
Finally, here's a statement from the International Society for the Study of Dissociation:
Dissociation: An ongoing process in which certain information (such as feelings, memories, and physical sensations) is kept apart from other information with which it would normally be logically associated. Dissociation is a psychological defense mechanism that also has psychobiological components. Generally, it is thought to originate in "...a normal process that is initially used defensively by an individual to handle traumatic experiences [that] evolves over time into a maladaptive or pathological process..." (Putnam, 1989, p. 9).