Regarding what the sound deadener does, it stops some of the external noises from entering, much like sound deadener anywhere else in the car. It doubles though to keep sounds from "escaping". It's basically sound insulation.
Edit: Also regarding the dash, I wouldn't take it out for the soul purpose of sound deadener unless it's warm where u live and u have a day to kill, like a weekend day. This is assumng you have nothing better or more important to do.