Well, just for my own revision I went and dug out my ATPL notes and, yes it does say that dihedral works because a roll causes a side slip which changes the AoA vectors which increases the lift on the lower wing.
I find that hard to visualize, which is why I think of the correcting roll coming from the difference in the vertical lift vector between the two wings - because in the real airplane in the real air, we are after all talking about overcoming weight. My (incorrect) theory assumes a vertical movement of the aircraft to provide the correcting roll whereas the actual restoring force is created by a sideways movement.
Okta's thought experiment with the wire prevented sideways
and vertical movement of the aircraft, which then stops the dihedral working.
Cheers!