I know you can dismiss all followers because there's the Lone Wanderer perk, but the only way I have been able to so far is to trade one follower for another. Gotta be something stupid and simple but what am I missing?

If I tell him to wait at Sanctuary, then fast travel, there he is again, so how do I dismiss a follower?

When you tell Dogmeat to go home to Sanctuary, he does go there and wait for you, but he should no longer be your companion. I don't know that I even ever officially HAD Preston as a Companion --- he certainly doesn't follow me around, he just paces the property.

EDIT: Just to be clear, there is a Talk option for Dogmeat and one of them is, like, Dismiss Companion or something like that. Not sure how other companions' conversations are worded but it sounds like maybe you were using the Command interface and not the Talk-Dismiss conversation options.

Yeh it was Preston I was having trouble with, never got the Talk option. Eventually replaced him and the subsequent companions had the proper dialogue options.