Better gear = better stats = better dps (even If it's just by a bit)
Try running a dungeon with everyone weaing average IL set and then do it again with people with higher gear set. See which run will be faster and smoother.

Niddhog extream for example. If all dps had the good gears and weapons + know their jobs. It can be done with 3 dps instade of 4.
Heck there is a video with 7 tanks and 1 healer clearing it. (all wearing heigher than avergae sets)