Yes it does. Noise Removal can reduce the dither noise by about 30 dB, which is just enough to push shaped noise below the bottom bit for 16 bit format. However it also causes distortion to the rest of the sound which outweighs the benefits of the procedure.
On the other hand when using the Noise Gate, sound that is above the noise threshold is totally untouched (provided that the “Gate Frequencies Above” setting is at zero).
Another angle on this is that for non-silence we would usually want the dither noise to be present because it reduces the quantization distortion that would otherwise be created when downsampling from 32 bit to 16 bit. For audio above the noise threshold the Noise Gate leaves the dither noise alone, whereas the Noise Removal effect is attempting to remove it.
The importance of turning dither off while we do this is a) we want to avoid putting dither back into the silence on export, and b) the audio has already been dithered so we don’t really want to dither it again.