Based on my understanding of the P-51, oil dilution is used during winter operation in cold weatrher. The engine oil being more viscous when colder, it can cause engine issues during engine start and also during rapid increases of power (as in takeoff). Viscous oil means inefficient lubrication of engine parts, which can explain a very rough engine start or a failure to lightoff the engine.
Oil dilution simply means the oil is diluted with fuel. When the engine lights off, the fuel is burned and warms up the oil much more quickly. I assume the oil dilution system is quite similar on the Spitfire as well.