I would like to know if the audio engine is 32bit? I can only set it at 16 in config page.
And when should i use the dither option?



Yes the Renoise engine is 32-bit.

If you are rendering you can choose 16-bit. If you do that, then dither is an added option to shift the bit rate using a different method. Dither introduces mathematical noise to attempt to smooth the sound - some prefer it, others do not. Let your ears be the judge.

Others will be able to flesh those explanations out much better than I can.