D-Star uses GMSK modulation at 4800bps. The D-Star spec allows for GMSK, QPSK and 4FSK, but only GMSK has been implemented at this stage. GMSK is an "older" modulation system, but this also means that it's a lot easier for those wishing to home-brew D-Star modems.
The DV Dongle is commonly used to allow you to talk to D-Star repeaters and reflectors from your computer (PC, Mac, Linux). It contains the AMBE vocoder that D-Star uses.
The DV Dongle also allows you to be a little adventurous and use it to transmit and receive D-Star on RF with a suitable modem (either hardware or sound card based) and a radio with a 9600 baud packet socket. You can "roll your own" D-Star radio if you so desire... maybe not as elegant as a commercial D-Star radio but it does work.
Michael.
VK5ZEA