The 20-year-old defender, who moved to White Hart Lane over the summer from Sporting Lisbon, has been primarily used at right-back by Mauricio Pochettino this season.
He also operated at full-back for his country as England booked their place at next summer's European U21 Championship with a play-off victory over Croatia.
Dier has made it clear, though, that his preferred position is at the heart of a back four and is eager to prove his worth to the coaching staff at Spurs.
Southgate, who is preparing his U21 side for a friendly date with Portugal on Thursday, understands Dier's motives for wanting to spend the international break with his club and insists he has no qualms at giving the youngster time to work on his domestic game.
He said: "It is an interesting one. We had quite a mature conversation about it.
"Long term we both agree that he is unlikely to be a full-back but he is still happy to play there.
"He is going to be a centre-back. And, without wishing Mauricio a problem, I think I agree with that.
"Let's be clear about this. He feels there's benefit to working on that with time on the training during this period.
"Here, we're preparing for a game. In development terms, back at his club, the footwork training, the mobility training, you can do a lot more of that if you're not working towards a game.
"So we agreed, that with him having played the last two for us, we didn't need to see him, he would go through that work.
"Will there be a black mark? No. I'm sure if I had picked him he would have come at right-back or wherever.
"I've had other scenarios where people have elected not to come. And they're not here. But this is different. I'm totally comfortable with this."