Creating dances for actors requires a special skill set. Although an actor may possess great body awareness, that does not necessarily go hand in hand with the ability to grasp actual dance steps, retain them, or perform them with any sort of stylistic grace. So the mindset to approaching this kind of work from the choreography perspective necessitates patience and knowledge that compromise will be the way to best achieve the desired outcome. Often dance rehearsals for a theatre play are brief, as the actors primary focus is on scene-work and blocking. This differs from dance rehearsals in which studio rehearsal time is often dedicated to improvising and creating the movement on-site. In theatre, a choreographer must enter the rehearsal with steps and a design in mind already.
But being prepared is not enough. The most important ability that a good choreographer brings to a theatre collaboration is that of story-telling. Even though a dance within a play might appear to be strictly entertainment, it exists as part of a larger story. The details of that story can (and should) come through in a dance.
A dance can provide the excuse for characters within a play to communicate something beyond what they are allowed to say in scripted words. (In Shakespeare, love relationships are often revealed in a dance.) A good theatre dance can introduce, explain or expand upon physical relationships (the first meeting of Romeo and Juliet), break away from constraints of society or situation (the dream ballet from Carousel), or present a ritual or celebration (the title song from Hello Dolly or a Shakespeare wedding dance). To be effective, the dance must suit the situation and be a believable extension of the characters performing it. The action does not abruptly stop and suddenly a dance begins. A good bit of choreography flows seamlessly as part of the logical sense of the play.
In a successful piece of theatre choreography, the audience is entertained and sometimes surprised to see actors moving in skilled choreographed patterns. But they also learn more about the characters, story and the situation after seeing the dance.