A dado saw blade is, appropriately, used to make dadoes in a piece of wood, so what is a dado? A dado is a groove into which another piece of wood is intended to fit, with the blades most often seen a dado blade on a radial arm saw or table saw.
A dado blade setup usually works by having two blades that cut a groove of the desired width into a piece of wood. Inbetween the two blades are what is known as a chipper. The chipper works to hollow out the area between the two blades as they cut into the wood and also works to smooth out the bottom of the groove so as to ensure a good fit when the opposite piece of wood is fit into the dado. A dado set up of this type is known as a stacked dado, and allows for the changing of the width made by the cut. Significant changes to the width of the cut may require that the assembly be taken apart, which can be a time consuming task.
A wobble type blade is a circular dado blade that allows for adjustments of the angle that the cutting is done at. As the angle that the cutting is done at grows more extreme, however, the dado blade will begin to vibrate and care must be taken that the blade does not begin to vibrate so much that it begins to effect the cut of the furniture.
Dado blades are great when used to create any kind of groove, particularly for something like furniture, as the chipper ensures a smooth fit along the groove, with the chipper itself being adjustable as well.