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A: Calling such inclusions “incorrect” overstates the case. An occasional inclusion of another character’s name is entirely appropriate.
What the person who gave this advice is trying to point out is that when real people really converse, they rarely use one another’s names. So we need to be aware whether characters are doing so too often. One symptom frequently found in the manuscripts of newbies is dialog like this:
“Ismene, mine own dear sister,” Antigone said, “what new edict is this of which they tell, that our Captain hath just published to all Thebes? Knowest thou aught? Hast thou heard? Or is it hidden from thee that our friends are threatened with the doom of our foes?”
Ismene answered, “No word of friends, Antigone, gladsome or painful, hath come to me, since we two sisters were bereft of brothers twain, killed in one day by twofold blow.”
“I knew it well, Ismene,” Antigone said, “and therefore sought to bring thee beyond the gates of the court, that thou mightest hear alone.”
Ismene leaned closer. “What is it, Antigone? 'Tis plain that thou art brooding on some dark tidings.”
“Ismene, hath not Creon destined our brothers, the one to honoured burial, the other to unburied shame?” Antigone replied.
Now if you look at the original text, you’ll see that Sophocles is not quite that ham-fisted. Only the first two lines contain the interlocutors’ names. The rest proceed without them. You need them once to show who’s talking, but after that, as there are only two people in the scene, you don't really need any more reminders. Although if it’s a long scene, another once in a while can help -- and can even reduce the need for dialog tags.
Moreover, sometimes such insertions are needed to help the reader keep track of who’s speaking to whom. If three women are working in a kitchen, and Judy is closest to the sink, a line of dialog like “Judy, would you hand me a dish towel?” is ideal.
Dialog needs to be realistic. But that's different from being real.