My understanding of the definition of time dilation is that it is the ratio of proper time to coordinate time. I haven't found a textbook reference to check and confirm this definition, but I haven't seen the definition fail fail either.
If we assume the definition is good, then time dilation doesn'the have any direct physical significance except under certain situations. One of these situations is when you have a sort of symmetry called a "timelike Killing vector"' which is present whenever you have a static or stationary metric, as Matterweave mentioned. In these cases, when your coordinate time reflects the underlying physical symmetry, time dilation has some physical significance.
Otherwise, time dilation depends on the particular coordinate system you use. More precisely, it depends on what notion of simultaneity you adopt. It should be well known that simultaneity is observer dependent in special relativity, thus different observers have different notions of simultaneity. This implies that they have differnt notions of time dilation, so the concept of time dilation, like the concept of simultaneity, is observer dependent. It seems that this point causes a lot of oblique arguments, it seems people resist understanding that simultaneity is not absolute, and can't really deal with the consequences. But I don't want to get off track, just point out that time dilation in general is observer dependen't, and that a widespread lingering belief in absolute Newtonian time is an obstacle to understanding.