Originally Posted by woodenink  what do you mean "dither " the image |
I think they mean 1-bit (black and white) image, with the single bit being either on or off. 2-bit is very unusual.
So anyway, when you dither the image it creates halftones which use different spacing of the dots to simulate grayscales. I added example images to my first reply.
http://en.wikipedia.org/wiki/Dither http://en.wikipedia.org/wiki/Halftone
Since the laser can either fire the laser or not it is a 1-bit device, ok this isn't strictly true as you can adjust the power to create true 3D or gray levels but in practice most machines use a fixed power and adjust perceived power using PWM or frequency.
Open in Photograv, set the size and DPI to match your laser and final size and then save the output as 1-bit (b/w) bmp.
Zax.