Imboring25, while I agree with most of your comments, the explanation of dihedral effect is not correct. When an aircraft banks, a portion of the lift pulls the aircraft to the side, while the vertical component of lift is no longer equal to weight, so the aircraft begins to descend. The net result is a decending sideslip. If the wing has dihedral, this sideslip changes the angle of attack of the wing such that the low wing angle increases and the high wing angle decreases. This produces a rolling moment to roll the airplane away from the sideslip (back toward level). This tendency to roll away from a sideslip is the dihedral effect, and will occur in any attitude regardless of the direction of gravity.

This lateral stability interacts with directional stability since the sideslip that produces the corrective rolling moment also tends to swing the nose toward the sideslip. An airplane with a big rudder, and little dihedral will tend to proceed into an increasingly steep spiral dive, while one with a small rudder and a lot of dihedral will tend to rock a lot and the nose will wander.

Dihedral effect is sometimes called "rudder coupling" since the sideslip introduced by rudder application will cause a roll response also.