Share dilution is when the percentage of a company's stock that you hold is decreased through the issuance of more shares or the company issuing convertible securities. While the absolute number of shares that you hold remains the same; the total number of outstanding shares is increased, thereby reducing the percentage of shares you hold.
As an employee, your shares are always subject to dilution - any time the company raises additional capital, your shares will be diluted. Assuming everything is going well though, the amount of the dilution will still be less than the overall increase in value. That is, if your share in the company drops from 1% to .75% but the overall valuation of the company increases from $10M to $20M, your share is now worth $150,000 instead of only $100,000.
Ultimately, as an employee, there's really nothing you can do to protect yourself from dilution. Investors will typically include anti-dilution provisions to prevent this, but these typically are only available when you are investing in a company, not as an employee.
Dilution of shares means when a company merging with another company the share value of a company generally decreases with increase in the number of shares out standing but capitalization of a company remains the same.