taken from
http://www.b2streamlines.com/EffectiveDihedral.pdf
If the wing has some dihedral (wing tips higher than wing roots), the sideslip creates a situation in which the lower wing, which is moving into the sideslip, meets the oncoming air at a greater angle of attack than the higher wing. This generates a restoring force. It should also be noted that the lower wing, because it is operating at a greater angle of attack, is generating more drag than the higher wing. This creates a yaw to the left, thus reducing the sideslip. The result of all of these effects is to both reduce the sideslip and restore the wings to level.