The short answer is that the typical dielectric nipple connection (as opposed to an insulating union) DOES have electrical conductivity between the pipes. The connection, though exists only along the exterior (the dry path), where the pipe surface is out of the water.
Where the dielectric part comes into play is in the wetted path. A dielectric nipple connected to another pipe (or flexible copper line) prevents contact between the steel of the nipple and the copper line connected to it IN THE WET INTERIOR. Galvanic corrosion occurs at a wet junction between dissimilar metals, thus that is where you want the insulation. A direct electrical connection in the dry areas is fine, and is desirable for other purposes such as grounding and prevention of stray electrical currents that can cause corrosion. I believe this is also covered elsewhere in the site. Here is a link to a manufacturers spec page.