Dehydration is a generally dangerous condition for any animal, in which the tissues are low on water. It is particularly likely in poorly-regulated or hyperglycemic diabetics, and also particularly dangerous for them, because it can quickly trigger Diabetic ketoacidosis(DKA).
To check if your pet is dehydrated, look at their gums and their skin. Skin will not snap back quickly when pinched, gums will be tacky or dry. This condition can be deadly or lead to deadly complications, within a day, so it must be remedied immediately.
In any case of dehydration, check frequently for ketones. Mild dehydration may be possible to remedy with lots of water; if this isn't working, the next step is subcutaneous fluid injections, usually performed by your vet. (Though some people see this problem enough to have the equipment and fluids at home.)
Untreated dehydration can cause the blood to be more hypertonic, which in turn can suck water from the cells causing more dehydration. It's a vicious circle.