Technically, DPI (dots per inch) is always an incorrect term to use when discussing digital images, despite the fact that many programs use the term. The proper term is PPI (pixels per inch). DPI is only properly used when discussing printers and only when discussing their mechanical "marking engine" (that portion of the printer that marks the paper).
Changing a file's PPI doesn't change anything in the file except a minor notation in the file's header. The actual pixels are not affected by the change and thus no size change is seen in the image. This note is for applications that have their own concept of a virtual page (page layout programs) or some other virtual inch concept (e.g. the rulers in Photoshop). It can be important to know how many of the files pixels will be mapped to a given inch in the final print so having a program translate the file's width in pixels into a width in inches for some given PPI is convienient. Also, when using page layout programs its convienient for images to import at the size the photographer intended by default. By having a PPI specified in the file's header it is possible for the page layout program to size the picture as intended. This latter reason is the reason the concept was invented.
The setting you are encountering in the RAW converter is there as a convenience. The original RAW usually doesn't have a PPI defined in its header. The converter is designed to assign one when it creates a bitmap out of the RAW.
BTW, most of the time that you see images import or open in applications, like Photoshop, with a PPI of 72 it is because the file lacks any PPI specification. The field in the file's header, a database like structure, is merely been left blank by the file's creator. The 72ppi value is the common default that application plug in when they encounter such unspecified files.