Dexterity increases damage done by weapons with a scaling mechanic. A letter denoting a weapons specific scaling properties is noted beneath the weapon's requires dexterity stat. The letters range in order of effectiveness from E, D, C, B, A, and S.
Weapons with an E rating for scaling will receive a poor benefit from investment in dexterity while weapons with an S rating receive the greatest benefit.
As is with every other stat in the game, it also has indirect bonuses such as increasing the player character's flat damage absorption. Notable among these indirect bonuses is a reduction to fall-damage with every level invested into dexterity.
As of the 1.32 Regulations patch, Dexterity has two soft caps: 40 and 80.
For most normal builds, the damage return for weapon attack rating stops at 40 Dexterity. This applies to both quality builds and Dexterity-focused builds.
When utilizing the Sharp infusion, scaling on weapons changes at high levels. Attack rating returns between 40 and 60 Dexterity are relatively poor, with most weapons only seeing an increase in 1 point of damage per level of investment. But past 60 Dexterity, scaling increases again, seeing gains of 3 to 5 damage per level up until roughly 80 Dexterity, where it will gradually fall off.