How to write a story that doesn't suck

Dialogue

-Character thoughts that cannot be heard by other characters are to be italicized and not put in quotations, though this is flexible based on perspective and narrative. Also, if you make one character's thoughts read by the reader when not in first person, DO NOT also write out the thoughts of other characters. You just stick to the one, at least for that scene or chapter.

-YOU MUST ALWAYS BREAK THE PARAGRAPH IF A DIFFERENT CHARACTER IS SPEAKING. 

Part two: Making your dialogue flow and feel realistic

Now, how do we make dialogue feel realistic? Well, realistic even in a sense of fantasy/fiction, that is. Dialogue is perfect for expressing plot and revealing things about characters, environment, plot, and emotion. However, there is one very VERY important rule to writing dialogue:

YOU CANNOT EXPLICITLY SAY WHAT YOU WANT TO SAY!

That's right. Avoid being upfront at all costs. Confusing? Of course it is! I'll give you an example

Context for this scene: Character A, "Terrance," needs to break up with character B, "Ada." He feels emotionally abused by her, doesn't feel like their relationship is equally yoked, and is confused about his feelings for a third character. Other things you would want the reader to know (perhaps already explained earlier on in your work, out of this scene) is that Terrance is completely blind, he and Ada have been in a relationship for a year and a half, they are both Juniors in high school, Ada doesn't like Terrance's littler brother, and it is the beginning of Christmas break. First, I will show you what NOT to do to write this scene.

"Ada, can we talk?" Terrance asked as he joined her outside in the snow.

"It's Christmas break! We have all the time in the world to talk!" Ada said with a grin, "I know you can't see it, but I am smiling right now. I am happy!"

"How long have we been dating?" Terrance asked grimly. 

"A year and five months!" Ada replied, "why do you ask?"

"I just... feel strange?" Terrance responded hesitantly. 

"About what?"

"I want to break up with you," Terrance confessed.

"What?! Why!?" Ada exclaimed in alarm, "you can't leave me! You need me! We're only Juniors in high school, but still! We need each other!"

"I know, Ada, I'm sorry," Terrance sighed.

"It's because of your brother, isn't it?" Ada said with a sour tone in her voice. "I've always hated him. He told you to do this. Whatever lies he told you aren't true!"

"It's not about him, Ada," Terrance said, "it's... Iisan."

"Iisan?! You're gay?!" Ada fumed with anger. 

"Well, I'm not actually sure."

"So you've been lying about your attraction to me all this time?!" Ada huffed, opening the back patio door to go back inside.

"No, I wasn't! I never lied!"

"Well, I guess it's over then. Goodbye, Terrance!" Ada said, stepping back into the house and abandoning him on the outdoor patio.

What was wrong with that scene? Everything. Well, I did say everything I wanted to say. The reader now knows that this takes place during Christmas break, these are two high school kids, Terrance is confused about his sexuality, Ada hates his little brother, and now they've broken up. I ticked all the boxes that needed to be accomplished with that scene yet it was completely and utterly wrong. Why?