Dry rot is actually a fungal growth that destroys the cell structure of wood. In order to grow it requires moisture, oxygen, and warmth. Once started it will not grow in the winter, but it will survive and continue to grow during whatever periods of time provide its three necessary conditions.
Below 20 per cent relative humidity there is not enough moisture for the fungi to grow, so most well-ventilated parts of the house are safe. Although it takes a fair amount of moisture for it to start growing, it takes very little moisture to keep it growing once started. That is why floods or leaks can start problems where there never were problems before, and then they continue to rot.
Dry rot often occurs on studs and sheathing around unsealed electrical boxes, right where moist air leaks into the wall. Untreated wood studs should never come into direct contact with concrete that is below ground level -- always use pressure treated wood, or separate the wood from the concrete with a plastic sheet, or at least small plastic strips stapled around the stud to prevent direct contact with the moist concrete.
Dry rot should be cut away until sound wood is reached, and the replacement wood should be treated with anti-fungi wood preservative to ensure that shady spoors hanging around the area don't re-infect the new wood. Then the moisture must be controlled to prevent the conditions that caused the dry rot in the first place.