To dignify something — or someone — is to make it seem better, grander, or more important than it really is, especially by the word you choose. Teachers and newspapers often use it with a raised eyebrow: if you dignify a silly rumour with an answer, you have given it a status it did not earn. So the verb is frequently ironic, which is a different feeling from dignified (that one is praise). You might say a grand name dignifies what was only a short chat. It is not a warm word for “make someone feel valued”; it is about labels and status.