Before I answer the question posed I want to set the scene before two characters talk.
In a short story I am working on, a man is walking down a hallway, stops in front of a door with a security window, punches a code into a keypad, and enters into another hallway.

I do not tell what the facility is, but through describing what the man sees in the hallway, like the color of the walls and what type of pictures or posters are hanging on the wall and using phrases like ‘institutional carpet’ and what he observes by watching people, some of whom are looking at a TV, though few seem to be comprehending, the reader should get the idea that the man is in a nursing home.
The man walks into a room where a woman is sitting and looking out the window. He pulls up a chair and begins to talk. So now we have a setting. And now they must talk.
When faced with a conversation, especially an emotional one and one with a twist, and a conversation that must reveal character, a lot of thought must go into the dialogue.
You must know your character, know how he talks, and know his personality. What you need not know is how the conversation will end. If you choose to think of how it will end and write towards that end that works too. For me, I like to make it up as I go along. Like an improve actor.
If I know my character, then I can imagine the conversation. As I write I know the man is going to reminisce about two things. One is about how happy he was when he got married and the other is the worst day of his life when his two children, home from college, are killed in an auto accident.
So, like an actor, I go with the scene. A writer must get into the character’s head and pretend to be the character. Writing fiction requires you, not to think, but to feel. A good actor feels the words, understands the emotion. Once you feel the emotion of the words, the dialogue flows. It did for me, usually does. And in this moment where the man says more than the woman he is conversing with I come up with something that makes it all work, including the twist.
You see, the man thought he was talking to his wife. The woman said that she was not his wife, that her children were not dead. She made short interjections, then asked him to call a nurse; three of four times she would break in and ask for the nurse.
When the nurse does come she sees the man and an empty chair.
The man was not in the right room, his wife is dead, the woman who lives in the room was watching TV in the activity area, and the man had dementia.
But you never say what the facility is. You never give the background like a reporter giving news. You reveal through descriptive imagery and through dialogue, imagining you are an actor, not on the stage, but on the page.
Finished imaginings of mine are found at the top of my web page and the e-books are available on Amazon.
Thanks for reading.