Unless your yard is really small, it will take a large number of bags to actually do anything productive as far as top dressing. Loam is crazy cheap, even if you don't have a truck and go to Burnco/ornamental Law and garden/Blue Grass and shovel it into a Rubbermaid bin/Buckets yourself you will save a ton of money.
Top dressing can be pretty thick before it will seriously impede grass growth. As long as the grass is showing through, spread enough of it to level out low spots and give an even coat on everything.
Because I am lazy and don't want to type, this info from wikiHow is pretty much what i would have said anyway:
http://www.wikihow.com/Topdress-a-Lawn
Quote:
Apply the Topdressing
1Use a shovel or your hands to scatter the topdressing material over the lawn. Don’t worry if it’s not even at this point. Apply approximately 3 to 4 pounds (1.5 to 2 kilograms) of topdressing per square yard/meter. A good rule of thumb is to not have topdressing more than 1-inch thick in any spot.
2Take the back side of a rake or a topdressing tool called a lute and work the topdressing material into the grass to the soil level. There should be no visible remaining topdress when you finish this step.
3Fill in low spots. Remember to leave the tips of the grass exposed to the air. If you put down too much topdress, remove it.
4Sow new grass seed in bare spots in your lawn after you topdress. The extra nutrients and fresh soil can help it germinate and take root quickly.
Repeat the Process if Necessary
1Allow the topdress to settle. Wait for a rain shower or sprinkle the lawn to facilitate the process.
2Add a bit more topdress material, if necessary, to low places. Be careful not to totally cover the grass. Rake the topdress material so it covers the low spots.
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