"Dumped stages" is in regards to damaging or destroying stages after they are detached. For example, imagine you detach a stage and turn on the engine of the next stage. It's ok if the engine of the next stage damages the detached stage in this case, because it has already been detached.
And Marmilo is correct, this challenge used to be 200t before we lowered it because of engine heat not allowing you to closely stack fuel tanks and engines.