On-the-nose-dialog is where the conversation aims to tell the audience what they need to know.
Don’t ever write dialog with the audience in mind.
Well, the whole movie is for the audience, so yes, we write for an audience. But the characters in the story don’t know that they are being watched.
Have you ever had a conversation in a public place and you suddenly feel the urge to explain what you are talking about, so the unknown people around you will get you right? Suddenly you start to add information that the one you are talking to knows, and you would not need to say, unless you wanted someone else to get the picture.
Thank you for last night. It was great to walk along the beach with you and your parents. You really lifted a stone from my heart telling me all was well with Stephan.
That kind of dialog is on the nose.
It is bad dialog.
Consider this instead:
Thank you for last night.
Nothing to talk about. Glad to see you feel better. Oh, mom asked me to return this to you.
It is true it doesn’t reveal the same information. But the man and the woman know what they talk about. They don’t need to tell each other more than this.
The dialog is between the characters talking.
Few people dive right into a situation they knew nothing about.