Top dressing is a mixture of sand and soil usually 70-80% sand and the rest soil. When spread over thatch it helps to dilute the thatch and encourages new growth. After aeration it can become a great aid to root growth creating vertical holes filled with an easily penetrated media. If you need to level out deep profiles in the lawn it may better to use a more soil rich media and overseed it.
Top dressing is much more effective being used little and often.