1. It is social.
Something like a wading pool for people, they like to do it together.
2. It is healthful.
Clean dust is worked in around their feathers and skin to keep mites and other insect pests at bay.
3. It is cooling.
Rooting in the dirt, in a hole in the ground helps to cool the chicken when it is hot.
Chickens seem to know just where they want to do this dusting, when left to their own devices. They are rather particular about it, in fact, and frequent the same dusting spots, from my experience.
If you are going to provide them with a dusting box, then give them a shallow box 6" deep and about 2.5-3 ft square. Fill it about half full with clean, sifted dirt, sand and wood ashes in equal proportions.