We report an experimental and theoretical study of two most critical yet still to-be-answered issues in dispensing-based nanoimprint lithography (D-NIL): air bubble formation and absorption, and discuss their impact on NIL yield and throughput. Using real-time observation via video, we found two different mechanisms for air bubble formation (feature pinning and multi-droplet encircling), and studied the dynamic behaviour of the air absorption and air bubble shrinking under different conditions. Furthermore, we developed theoretical models and simulation programs of the air absorption and bubble shrinking based on molecular diffusion theory and hydrodynamics. We compared these models with experiments, and found excellent agreement. Our study shows that the key factors that affect the air dissolution time (and hence the air bubble shrinking time) are air bubble initial size, imprinting pressure, air solubility, and resist residue layer thickness. One of our key conclusions from the study, which has significant practical importance, is that although the air in a bubble can be completely dissolved in a resist liquid as long as the bubble is smaller than a certain size, the air absorption time might be too long for the dispensing-NIL operating in atmosphere or poor vacuum to have a necessary throughput in mass manufacturing.