In terms of actual chemistry, dry ethanol is ethanol with very little water. As both molecules are polar, they mix very readily. Removing water from ethanol can be done via distillation, followed by adding Magnesium Sulfate. It may be needed to dry ethanol if left open for a while when you need a pure ethanol solvent. This is not the same term as ‘dry’ when referring to an alcoholic beverage however – I believe in that context it refers to the flavour of the beverage.
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