Dispersion is the separation of white light (sunlight) into its constituent colours; red, orange, yellow, green, blue, indigo, violet. The band of colours is called a spectrum. It occurs because each separate colour has a different refractive index in glass, therefore each colour gets refracted by a different amount.
Newton hypothesized that white light is a combination of colors but from this experiment it could have been that the prism was modifying the light, adding colors to it. If the light was being modified by glass prism, then allowing only one of the colors; red for example, to fall on a second prism should create additional colours. Newton performed this experiment and failed to show that the second prism produced any additional colours. Newton therefore disproved other explanations which in turn helped to prove his own hypothesis. This is an important concept in scientific experimentation; eliminating alternative explanations.
Here is an explanation on how Newton performed experiments and discovered that white light is a combination of various colours and that each of them is refracted by different amounts.