In the 2005-2006 nba why was denver seeded above dallas even though they had 16 fewer wins? this never made sense to me?
In the Western conference, the Denver Nuggets won the Northwest division. Division winners (Spurs in Southwest, Suns in Pacific, and Nuggets in Northwest) get the highest seeds based on record (1 - Spurs, 2 - Suns, then 3 - Nuggets).
Then, non-division winners are seeded based on record. The Dallas Mavericks finished second in the Southwest division and had the best record of a non-division winner, thus awarding them the fourth seed (followed by 5 - Grizzlies, 6 - Clippers, 7 - Lakers, and 8 - Kings). You will also notice that the 8th seeded Sacramento Kings had the same record as the 3rd seeded Denver Nuggets.
The following verbiage from NBA.com will also help in regards to understanding seeding:
Teams 1 to 4 in each conference are the three division winners and the team with the next best regular-season record, with the seeding of these four teams determined by regular-season record. The playoffs seedings of Teams 5 to 8 are based upon regular-season record.
NOTE: I believe the verbiage above was put into place after the 2005-2006 season.