Game dumping is simply backing up/making data copies of games, mainly in ISO format, or in a directory format.
There are a couple of ways, either through the other OS on the PS3 using SAK, then you can either dump using SAK or dump from browser. Or you can use Linux to create dumps, or if you have a Lite-On Bluray Drive that will read PS3 game discs.
I dont understand what you mean by does it really work, it works for the purpose of dumping a game (which wont be fully dumped btw, unplayable) and there is no method to make the dumped games/images work on the PS3 either by a loader or by a physical disc copy, also a 1:1 copy isnt possible because the discs are pressed and it would involve dumping the games in LV2 supervisor mode/privelidge mode on the PS3 then patching the games (if Custom firmware existed) and even then wouldnt be a 1:1 copy.
Until an exploit is found, you wont be able to play the games, so dumping for the sake of dumping games will work, but they will all eventually need patching.
Edit: Already answered by PS3News