Answer: It measures capacitance and their insulating properties precisely.This bridge is widely used for the testing small capacitor at low voltage with very high precision.The standard capacitor $C_3$ is a high quality mica capacitor with low loss for general measurements. For measuring unknown capacitor , it is connected to one of the arms of the bridge and $C_1 and \ R_2$ are adjusted to obtain bridge balance. The circuit diagram is as shown below: 

When bridge is balance, $Z_1Z_x=Z_2Z_3$

$\therefore Z_x=Y_1Z_2Z_3$.....................(1)

Where $Z_x=R_x-\dfrac{j}{\omega C_x}$

$Z_2=R_2$ , $Z_3=\dfrac{-j}{\omega C_3}$

$Z_1=R_1\mid\mid \dfrac{1}{j \omega C_1}$

$\therefore Y_1=\dfrac{1}{R_1}+j \omega C_1$

Putiing all the values in (1), we get

$R_x-\dfrac{j}{\omega C_x}=R_2(\dfrac{-j}{\omega C_3})\times \dfrac{1}{R_1}+j \omega C_1$

$R_x-\dfrac{j}{\omega C_x}=(\dfrac{-jR_2}{R_1\omega C_3})+\dfrac{R_2C_1}{C_3}$

Equating real and imaginary part,

$R_x=\dfrac{R_2C_1}{C_3}$ and $C_x=\dfrac{R_1C_3}{R_2}$

Thus , by using this equation , we can calculate unknown resistance and capacitance.

The dissipation factor D of RC circuit is given by ,

$D=\dfrac{R_x}{X_x}=\omega C_xR_x$

Since , D is reciprocal of quality factor , it also indicates quality of capacitor.