I'm not sure this is the best place to post, tell me I'll remove it!

As u may know CISCO offers the capability to configure as many loopback interface as u want 2, but Linux don't. I found it very uncomfortable (I'm used to CISCO).

The dummy interface is a way to tackle the problem, it does excatly what a CISCO loopback do.

One application is for NAT, more precisly masquerading, when u want to face the world with a unique IP@, despite several subnet & interfaces within ur private net.
Dummy interface will allow you to associate ur public IP with a virtual interface(the dummy) with no relatition to physical interface state.

For ppl using Linux boxes for routing purpose the dummy interface is really helpful, especially with BGP, since BGP rely on TCP connection u don't want to use an interface that could state down.

Here comes the way to configure it:
sbin/insmod -o dum0 dummy
This statement just uses the modules to load the support. Skip it
if you have the dummy device in the kernel

/sbin/ifconfig dum0 xxx.xxx.xxx.xxx up
/sbin/route add xxx.xxx.xxx.xxx dev dum0