The way in which a dog sees the world is very different from the way humans see it. A dog's sense of smell is far superior to that of humans. It is thought that a dog's sense of smell is at least 100 times more powerful than that of man, and it is obvious that dogs rely on this sense a lot, when you see them using their nose to investigate an object it has found.
When two dogs first meet they generally have a good sniff at each other, as they check each other out. It is also common for a male dog to cock his leg to mark his territory, and they do this to cover up the scents of dogs that have been there previously. A bitch in heat emits a special smell only noticeable to male dogs, which is why bitches in this condition are usually kept a close eye on.
A dog's hearing is also superior to man's, especially high frequencies. Hence the use of 'dog whistles', which we cannot hear, but can be heard by dogs. Also, often a dog will hear and recognize a noise before humans can, like footsteps approaching down the path, or the car pulling onto the drive. Dog's can also move their ears to help them pinpoint the sound more accurately.
A dog's eyesight is thought to be inferior to man's, at least during daylight. There is no firm evidence either way as to whether dogs are color-blind or not, but it is thought that their color vision is not as well defined as humans. However, at night it is a different story. Dog's eyes are better equipped to deal with the dark, enabling them to see better than humans. Also, dogs have better peripheral vision, which allows them to see further to the sides than we can. So, not only can they hear someone approaching from behind sooner, they can also see them sooner as well.
Communication between dogs is very impressive, they utilize sound, smells and body signals. The eyes are very important, a stare is usually used by a dominant dog to a submissive one, to show dominance. If a person stares at a dog, the dog will usually look away, and may roll on to his back to show submission.
The way a dog holds his ears is also an important indicator. Ears held back against the head show submission or fear, whilst ears which are erect indicate alertness. Tails are also a great indicator. If it is held high it generally means alertness, whilst a wagging tail probably means excitement. A tail held low generally means fear or submission.