With the exception of nature documentaries, or very oddly esoteric works, narrative entertainment is driven by characters. Characters, more often than not, communicate with one another through dialog. Time and time again, especially in films, we see this dialog become murky, bogged down, or unnecessarily obtuse. Unless it is completely essential to your plot, or the character themselves, your characters should communicate clearly with one another.
Sometimes characters will have difficulty communicating as part of their nature. Their world-view may be skewed or a mental condition may color how they see and relate to others. These characters can make for important, powerful stories about human nature. But the bulk of the problematic characters that come to mind when I talk about expository dialog and the like are not saddled with psychological or personality disorders that affect their speech or outlook. Most of them are just badly written. Dialog drives so much – why waste it on exposition or clarification unless it is absolutely necessary?
One particularly egregious violation of good taste in dialog is “the pronoun game”. One character makes a comment about what’s happening but, instead of naming names, they use an ambiguous pronouns. The other character has to ask for clarification, which is then easily or dramatically given. It’s a waste of the audience’s time, especially if we have already met the party to whom the first character is referring.
There is one sort-of exception to this rule that I can think of – a heist tale. If you’re spinning a yarn where you want your protagonists to be particularly clever, it can be useful to provide the setup for the caper, cut to the action, and have them recount elements of it afterward, so that what seems to be very fortuitous timing is seen instead as excellent forethought and careful planning. From highly stylized films like Ocean’s Eleven to works of written fiction such as Jim Butcher’s Skin Game, this method is proven to work in this case. But I really can’t think of any others.
It is just as true for this storytelling challenge as most others: the best way to tell your story is through action, not exposition. Let characters show, rather than tell, what is happening in their minds and all around them. History and motivation should become evident in when and how they act, rather than providing a dry, plodding dossier through expositional dialog. Your characters drive your story – don’t let their dialog drive it into the ground.