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The user faints. The Pokemon switched in next has its HP and PP of all its moves restored to its maximum and any status conditions removed. The Pokemon enters the field at the end of the turn Lunar Dance is used, so the Pokemon switched in does not take an attack. The Pokemon switched in will be healed to maximum before it takes any entry hazard damage. Fails if the user is the last non-fainted Pokemon in its party.
Lunar Dance is a useful move for support Pokemon. It can be used to heal sweepers that are susceptible to residual damage, such as Salamence, or those weak to entry hazards, Volcarona in particular.
Healing Wish is a similar move that faints the user but fully restores the HP and status of a teammate.
Memento is a similar move that faints the user but lowers the target's Attack and Special Attack by two stages.