Wafer dicing is the process by which the individual chips or integrated circuits on a silicon wafer are separated.
A scribe line is an area between the die left empty of a circuitry, where the dicing saw can pass through ,thereby seperating the dies(chips) from a wafer. Scribe line is otherwise referred as street,kerf, saw-kerf.
The space should be enough to allow seperation of the die by cutting or breaking with out causing any damage to the die. 
The wafer saw will be able to cut in a straight line. The dicing process can be accomplished by scribing and breaking, by mechanical sawing (normally with a machine called a Dicing Saw) or by laser cutting.
After the dicing process the individual silicon chips are encapsulated in the Packages.
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