Dumping games is the act of taking a game from your system or gamecart and copying it into a readable format onto your SD card. Dumping is perfectly legal if you keep the dumps to yourself, however sharing these dumps is piracy and is illegal.
This guide will tell you how to dump games from various formats and for various purposes. Dumping 3DS cartriges as .cia files is good if you want to install them to your system. Dumping them as .3ds files is good for emulators. Installed titles cannot be dumped as .3ds files. NDS cartiges can only be dumped as .nds files and cannot be installed (however, you can play them with emulators or flashcarts).
Dumping the RomFS of a game is primarily for romhacking purposess.