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Simply put, it's the distance light travels in a year. We see the sun as it was 8 minutes ago, because the sun is 8 light minutes away from earth.
To answer your other question: Yes, someone more than 65 million light years away from earth would be able to see dinosaurs if they had a telescope powerful enough to see something that far away with that much clarity. Such a telescope does not exist as far as humans on earth are aware.
Ignoring some slight complications, the speed of light is consistent everywhere. If light always travels at the same speed, we can begin telling distance in terms of how long the light has had to propagate.
An analogy may be the following: Let's say you get in your car. For simplicities sake, we'll say that the car can ONLY DRIVE 60 km per hour (Analagous to the single speed of light). Because we know what speed you are traveling, in km/hr, we can talk about how far you are going in terms of only time. For example, you get into your car and drive for 2 minutes (60km/60 minutes * 2 minutes). In this case the minutes cancel our (minutes/minutes =1) and we are left with 2km. We can either say "You have driven for 2 km" or we can say " you have driven for 2 car minutes".
In this example, it makes no sense why we would want to say that you traveled 2 car minutes rather than simply saying you traveled 2km. We have a very good concept of what 2km looks like in our brains.
The speed of light is around 3,000,000km/second. The scale of that is beyond what easily fits into our heads as humans (try to imagine a group ten people standing in front of you. Now try imagining how many of those groups would be required to have 1 million people standing in front of you. It's possible, but not easy). Instead of fucking around with numbers that we can't easily conceptualize like 24,000,000 km between the earth and the sun, it's much easier to reduce that to a more managable chunk of information. It takes light from the sun 8 minutes to reach the earth. Is 24,000,000 easier to conceptualize, or is it easier to say that it crosses a distance of 8 times the distance light can traverse in a second (8 light seconds )
I'm not really satisfied with this explanation, it's not really ELI5 material. If it helps, good. If it doesn't keep poking at me.