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It could just be how the person using the terms calls a dress that has been knitted. Or, it could mean that a knit dress has been made from knit fabric, which is a type of fabric that has been machine knitted on a very small scale (too small for a human to do) and that creates a knitted fabric that is soft, supple and stretchy. Sometimes it is called knit jersey fabric. In this case, the dress itself would have been sewn, not knitted by hand. If this is what the person means then, the knit dress is made from fabric, while the knitted dress was knitted from yarn.

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