Where to use dielectric grease

[mikeyfev1]

I have always heard (and have read here) that when reassembling electronic connectors it is a good idea to use dielectric grease.

But dielectric grease is a decent insulator. So exactly where should I use this grease? Let's say I am reassembling the emergency flasher switch on a W123. Since I don't put it on the actual electrical connections, where do I put it? Do I "seal" the switch case around all of the switch openings??