Dexterity encompasses a number of physical attributes including hand-eye coordination, agility, reflexes, precision, balance, and speed of movement. A high Dexterity indicates superiority in all of the above attributes, while a low Dexterity might well indicate that one of these attributes is actually superior, but that the others are very poor. It would not be unreasonable to claim that a person with a low dexterity might well be quite agile, but have low reflex speed, poor precision, bad balance, and be slow of foot (but slippery in the grasp).
Dexterity affects all characters with regard to initiative in attack, the projection of missiles from hand or other means, and in defensive measures.
Dexterity is the major characteristic of the thief class of character, and it affects their professional activities (such as picking pockets, opening locks, and so forth) accordingly. Thieves with a Dexterity ability score of 16 or more gain a bonus of 10% of earned experience.
Reaction/Attacking Adjustment is the penalty or bonus for both surprise situations and missile combat attacks.
Defensive Adjustment refers to the penalty or bonus applicable to a character’s saving throws against certain forms of attack (such as fireball, lightning bolt, etc.) due to dodging ability.
It also applies to the character’s parrying and/or dodging ability in missile or melee combat; in this case the penalty subtracts from the armor class of the character, making him or her easier to hit, while the bonus adds to the defensive value of the character’s armor class, making him or her harder to hit.
For example, a character with plate mail and shield is normally treated as armor class 2; if the character has 3 Dexterity, there is a +4 penalty, so the armor class changes to 6 (2 + 4). However, if the same character has a Dexterity of 18, there is a bonus of -4, so armor class changes from 2 to a -2 (2 + -4 = 1, 0, -1, -2).
All “Penalty or Bonus for” categories are fully detailed under The Thief. The penalties and bonuses are applied to the base chances of success for each named category. Racial adjustments for dwarves, elves, etc. are additional pluses.