Dimensional weight is a theoretical weight of the package. It is a pricing technique for International freight transport. You may see it also called DIM weight, volumetric weight, or cubed weight. It is a little bit of heavy reading, but if you are technical or just interested in fully understand how things work, go ahead.
Dimensional weight is different from Actual weight, which is the real weight of the package in kilograms or pounds. First of all, in the shipping world, Actual weight is rounded up to the next whole pound. Here we come to a Billable Weight. After freight company compares the package's actual weight to its dimensional weight, it decides how to charge you. The billable weight, the one you will pay for, is the one which is higher. That's what freight companies charge.
Every shipping company, FedEx, DHL, UPS, USPS or any other, will consider both weights when deciding on a charge for shipping a package. The first is the actual weight of the box; the second is the dimensions of the box. That means that if your package is large or oversized, then the shipping charges will be drastically increased.
Why is that? Each of their vehicles (trucks, airplanes, etc.) can carry a maximum weight and a maximum volume. If you are shipping heavy stuff, they will probably reach the maximum weight limits long before they fill all the available cargo space. However, if you are sending lightweight materials, they will probably fill the available space before reaching the weight limits of the vehicle. In either case, the plane or truck cannot carry any more packages, so the revenue expectations of the company will have to be met by varying the charges for the cargo on board.
So, by charging only by weight, lightweight, low-density cargo merely is not profitable. It takes too much space in the truck or airplane in proportion to the actual weight. So carriers use the dimensional weight to determine the rate. So if you ship lightweight materials or goods, those who take too much physical space, they charge you as if as if you send something more substantial. In other words, dimensional weight reflects package density, which is the amount of the space the package occupies in proportion to its actual one.
Each particular carried determines Dimensional weight a little bit differently, and it is, by the way, changed every year. Of course, the rates always move up, as shipping costs rise every year.