In quantum mechanics, both of those objects are operators. The operator [itex]\mathbf{r}[/itex] operates on state vectors in real space, whereas the operator [itex]\sigma[/itex] operates on spinors in spin space. You can treat (symbolically) the dot product between [itex]\mathbf{r}[/itex] and [itex]\sigma[/itex] as a normal dot product between two vectors, i.e.
[tex]\mathbf{r}\cdot\sigma=x\sigma_x+y\sigma_y+z\sigma_z[/tex]
where the [itex]x,y,z,\sigma_x,\sigma_y,\sigma_z[/itex] are all operators. Say we have a state [itex]|\psi\rangle=|\phi\rangle\otimes|\chi\rangle[/itex] where [itex]|\phi\rangle[/itex] is a state vector in real space and [itex]|\chi\rangle[/itex] is a spinor. Then
[tex]\mathbf{r}\cdot\sigma|\psi\rangle=x\sigma_x|\psi\rangle+y\sigma_y|\psi \rangle+z\sigma_z|\psi\rangle[/tex]
[tex]=x|\phi\rangle\otimes\sigma_x|\chi\rangle+y|\phi\rangle\otimes \sigma_y|\chi\rangle+z|\phi\rangle\otimes\sigma_z|\chi\rangle[/tex]
where the operators [itex]x,y,z[/itex] operate on the real space state vector [itex]|\phi\rangle[/itex] and the operators [itex]\sigma_x,\sigma_y,\sigma_z[/itex] operate on the spinor [itex]|\chi\rangle[/itex].