Let's first recall who exactly the character of Dill is in Lee's novel, To Kill a Mockingbird. Dill Harris (or, "Charles Barker Harris") is a summer visitor to Maycomb, Alabama, where he and his emotionally disconnected parents spend their vacation time with his Aunt Rachel.
Dill is just one year older than Scout, but seems much more daring and worldy. For example, he is a fan of the movies and regales both Jem and Scout with tales from the film, Dracula.
Dill is a bit mischievous and attention-seeking (most likely due to the lack of attention from his parents). Thus, he is the instigator of many pranks, including challenging the Finch children to approach the Radley home, and poking fun at its infamous, hermit-like resident, the mysterious Boo Radley.
Of their summer friend, Scout recalls in Chapter 1:
We came to know Dill as a pocket Merlin, whose head teemed with eccentric plans, strange longings, and quaint fancies.
One of Dill's most memorable quotes can be found in Chapter 22, in an exchange between Jem and Dill:
"I think I'll be a clown when I get grown […] There ain't one thing in this world I can do about folks except laugh, so I'm gonna join the circus and laugh my head off."
"You got it backwards, Dill," said Jem. "Clowns are sad, it's folks that laugh at them."
"Well I'm gonna be a new kind of clown. I'm gonna stand in the middle of the ring and laugh at the folks.”
This little aside says a lot about Dill's character. He uses his humor and daring to keep people away. Laugh at them, before they laugh at you, is his modus operandi. It's a measure of self-protection to keep the hurtful world at bay.