The free dictionary is correct: Damping results from rotation.
Since all rigid-body rotations of a flying aircraft will occur around its center of gravity (this is a consequence of the conservation of momentum), that rotation will cause a vertical movement of parts which have a distance to the axis of rotation. This vertical movement changes the local angle of attack in a way that a moment is created which opposes that rotation.
Let's use a roll movement for example. The sketch below should indicate how the local angle of attack changes: The aircraft rotates around its lengthwise axis and one wingtip moves up while the other moves down (red arc segment arrows).
The rolling speed $\omega_y$ caused by the aileron deflection $\xi$ causes a vertical movement $\omega_y\cdot y$ that grows with the distance y from the rolling axis. This vertical speed (green arrows) adds to the speed of the aircraft v$_\infty$ (cyan arrows) and results in an inclination of the local flow speed (red arrows). Since the ailerons are deflected, the local lift (blue arrows) should be different between left and right. But the change in local speed adds a lift increment which is of opposite strength and equalizes the lift change from the ailerons. This stops the aircraft from accelerating the roll movement.
If the aileron deflection is set to neutral, the rotation will now result in a lift difference between left and right, and since that lift difference acts on a lever arm y to the center of gravity, it causes a rolling moment. This rolling moment acts against the rolling motion, so the roll speed will quickly drop to zero. This is aerodynamic damping.
The lever arm y occurs twice: The local speed change grows linearly with y and the opposing moment, being the product of the lift change and y, also grows linearly with y. The result is a damping moment which is proportional to y squared.
The free dictionary article also mentions that damping depends on density. With lower density, the flight speed v$_\infty$ needs to grow so the dynamic pressure stays constant. With a greater v$_\infty$, the local speed change from rotation will proportionally be smaller, and so will be the damping moment. Since dynamic pressure is proportional to density and speed squared, damping goes down with the square root of density.
The sketch also illustrates another effect: Adverse yaw. Since the local lift in attached flow is approximately perpendicular to the local flow speed, the local lift points forward on the down moving wing and vice versa. This causes a yawing moment which will rotate the aircraft around its vertical axis unless opposed by a rudder deflection.
Pitch damping works the same: Just exchange the subscripts!