"The waiter is standing on her dress."
Translation:המלצר עומד על שמלתה.
also, notice that the verb is conjugated masculinely. if it were a waitress, the sentence would be המלצרית עומדת על שמלתה.
I was confused for a moment as well. So I guess the idea is that he is standing on the dress of someone else, presumably a diner that would have been introduced beforehand in context.
No, It is very rare when those two prepositions are interchangeable. ב is more like "in" or "at." על is like "on" or "about."