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The index of refraction of medium is dependent on the frequency of incoming light ray. Therefore if light with with wide frequency spectrum (such as daylight) enters for example glass prism, the component frequency bands (for visible colors) will diffract under slightly different angles. The result is light divided into colorful "strip" for each of basic colors. The very same effect is behind rainbow which is natural occurrence of dispersion. 

Image .5 Diffraction of light in prism (source: Wikipedia:)  #5.)

Practical Use of Dispersion

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<ac:structured-macro ac:name="anchor" ac:schema-version="1" ac:macro-id="1472a8f2416ecadc-777ab48e-4daa4693-895dad6d-afc7abd64324909c4f948fb0"><ac:parameter ac:name="">3.</ac:parameter></ac:structured-macro> 3. _Reflection and Its Importance_. (n.d.).  Retrieved December 10, 2012, from Physics Classroom: \[http://www.physicsclassroom.com/class/refln/u13l1c.cfm\]

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4. Total internal reflection. (2012, December 10). Retrieved December 10, 2012, from Wikipedia: http://en.wikipedia.org/wiki/Total_internal_reflection

5. Prism (optics). (2012, December 8). Retrieved December 10, 2012, from Wikipedia: http://en.wikipedia.org/wiki/Prism_%28optics%29^{Image Added}

1.http://en.wikipedia.org/wiki/Refraction

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