Pillar dancing is a technique for avoiding a battle until a more opportune moment. To pillar dance, simply flee a pursuing enemy around a small "pillar" of walls (1×1, 2×2, etc.) in the middle of an open, mapped-out area. By forcing the monster to move in order to keep sight of you, it will have a very hard time attacking you, even with ranged weapons; by staying in a mapped part of the level, you reduce the risk of stumbling across more monsters. Doing this can let you restore missing HP and MP (be aware that your pursuer will also be healing) or wait out a summoned monster's duration in safety.
Pillar dancing is not without risks, however. Faster monsters will simply catch up to you, rendering the process pointless. Due to speed randomisation, even enemies with equal speed will occasionally be able to act against you, possibly negating any health restored. Wandering monsters may stumble upon you as you're running, making the eventual fight that much harder. Even the cost of running can work against you; races with difficult dietary needs may not wish to spend turns needlessly.
That being said, it's still a situationally useful technique. It can minimize damage received while a caster recovers the point or two of MP needed for one last spell, and players with quickened HP regeneration can often outpace any damage taken. Fast characters will have an easier time of it, but are usually better off simply escaping the enemy and running upstairs to rest.
Prior to 0.6, monster speed was fixed, making pillar dancing much safer.