DIALOGUE margin is indented 2.5" from the left margin. A line of dialogue can be from 30 spaces to 35 spaces long, so the right margin is a bit more flexible, usually 2.0" to 2.5".
DIALOGUE rules apply when anyone on screen speaks. During a conversation between characters. When a character talks out loud to himself... even be when a character is off-screen and only a voice is heard.
Great dialogue is a window into the soul of your character. It sounds real... It's conversational. The audience feels like a fly on the wall, hearing natural interplay between characters. Great dialogue may use common language but express great passion, and even become a catch phrase in popular culture, as the line from Clint Eastwood's Dirty Harry Callahan "Go ahead. Make my day."
It's not a bad idea to read your dialogue aloud to see how it really sounds. If you have a difficult time reading a line, it may not be good dialogue. You'll definitely be able to tell if you organize a reading of your script and hear it that way (best with professional actors, like they do in Hollywood and on Broadway).
Script writing software now has the capacity to read your dialogue back to you via your computer's sound system. You assign a gender to your character name, even different inflections, and you can have a staged reading of your script right there in your living room.
FADE IN: EXT. KEY WEST MARINA - DAWN - ESTABLISHING Sailboats, yachts, and cabin cruisers all bob up and down in the warm blue water. INT. MASTER SUITE - MORNING Expensive designer sheets and comforter covers the nude, shapely body of drop dead gorgeous JULIE COOPER, 25. Sunlight filters through portholes over the muscled, tan body of FRANKIE CAMPISI, 38. He pulls the comforter down and begins kissing Julie's naked body. FRANKIE Rise and shine, Bluebird. Time to spread your wings and fly.