Why concentrated sulfuric acid for dehydration and dilute for hydration?
Think of the reaction as an equilibrium equation:

$$\ce{CH3CH2OH &lt;=&gt;[H2SO4] CH2=CH2 + H2O}$$

Now, using Le Châtelier's Principle, we can deduce Dissenter's comments.

In concentrated sulfuric acid there is little to no water (note that we also start off with little to no ethylene). The equilibrium shifts to produce products. 

In dilute sulfuric acid there is lots of water (and little to no ethanol). The equilibrium shifts to produce reactants.

As for the role of sulfuric acid, it acts as a proton source to enable the loss of leaving group in the forward direction and the electrophilic addition in the reverse direction.