There are many different ways to dissolve between one clip to the next. Though this is more cumbersome than some of the other ways, I like it better for the following reasons...it is easier to make microadjustments to the dissolving transistions and I can see all of the dissolves quickly in the full timeline view. You need to do what works for you though...

Look for the Overlay icon, on the lower left of the timeline...it looks like mountains or little mice rubbing ears. Select the icon by clicking on it. It will add overlay bars to your clips.

Choose the Pen Tool from the tool box. The keyboard shortcut is the "p" key.

Click on the overlay bar with the pen tool, this will add a point (called a keyframe). Add a point at the beginning and where you will want the dissolve to end. Then mouse over the first point (or last point if you are dissolving out of a clip), wait for you pen tool to turn into crosshairs, click on the point and drag it all the way down. now you can adjst the timing of the dissolve by moving the second clip from side to side.

You can erase points by dragging them up and off the timeline.