Sanding bits use an abrasive head to smooth or grind pieces of wood, metal, plastic and other materials. Flat sand bits smooth the top or bottom surface of these materials.
Since the dremel tool uses circular motion instead of vertical, use a circular drill bit to cut laterally. The dual purpose drill bit, manufactured specifically for the tool by Dremel, enables the user to drill straight down at the origin of the cut, then to move laterally in any direction. Use this bit to cut wood, plastic and other medium-soft materials. It's not effective on metal.
Drill bits do just that -- they drill. Dremel makes drill bits for wood and metal. They designed these bits solely for vertical use, not to make lateral cuts.
With a e router you can carve a shape into the sides of a wood piece. The Dremel tool has different router bits to carve conical, concave or multifaceted shapes. Routing is a common woodworking finishing technique used to "soften" the edges of cabinet doors, counter tops and other wood pieces -- both for practical and aesthetic purposes.