There are roughly two dozen primary dealers. In exchange for the franchise they must participate meaningfully in every treasury-auction and act as counterparties for open market operations, which makes them the shock absorber of the Treasury market.
The dealer takedown at an auction is the residual: whatever direct and indirect bidders did not take, dealers must. A high dealer share is therefore a weak-demand signal, because it means real money stayed away and the paper is sitting on balance sheets that will need to distribute it.
Example: at a 10-year auction, indirect bidders take 68%, direct bidders 18%, leaving dealers with 14%. The recent average dealer takedown is 17%, so this auction cleared into genuinely strong end-user demand.
Related: treasury-auction, bid-to-cover, auction-tail, repo, when-issued