Yes, you need to dither when going from 24bit to 16bit. The different dither options give a different sound. So, I'd suggest trying all three methods and seeing which one you prefer.
Normalize will push the volume up so it peaks at 0dB, unless you have set that differently.... personally I don't like doing this, i prefer to have control over how the audio will sound and get it mastered by a pro or attempt it myself ;)
offline bounce will be quicker, realtime, will bounce in realtime (song plays). Some people like to listen to the bounce.... also if you are using any realtime tricks in the environment (like arpeggiators NOT connected directly to the Sequencer input, but to a track/channel strip) then bouncing in realtime is necessary.
If you're really happy with your mix and/or the project causes Logic to falter during playback (disk too slow etc) then choose Offline.