Hello from the far-flung world of March 2014, where we finally have jet packs, flying cars, and electric toothbrushes, and everyone knows the answers to every iteration of old questions.
There is a situation which can cause the Dropbox iOS app to retain cached duplicates of your files on your iOS device even if you haven't favorited them, eventually using up a lot of space. Dropbox tech support seems reticent to acknowledge this, so I haven't been able to find out the actual causes for this problem, but some users have speculated that possibly if a Dropbox sync operation is interrupted, it might prevent the app from releasing the cached copies of your files that were in the Dropbox cache at the time (Dropbox needs to temporarily cache your cloud files locally on your iOS device to allow you to view them, and is supposed to delete them when you quit from the Dropbox app). Contrary to Dropbox tech support, under these (or some other mysterious) situations, quitting from the app won't always clear these particular "stuck" sandboxed/cached files, though the cached copies of subsequent files that you view or upload will be deleted from your iOS device when you quit from the Dropbox app.
The quickest way to delete the stuck Dropbox app cache files from your iOS device is to open the Dropbox app, select its Settings button, scroll to the bottom of the Settings page, and select the "Unlink" option. Your Dropbox cloud files will remain on the cloud--the only effect (that I know of--your mileage may vary) will be to clear the Dropbox cache on your iOS device. Then re-link your iOS device to your Dropbox account, at the bottom of the Dropbox app's Settings page. If there are files on your iOS device still waiting to be automatically uploaded to your Dropbox cloud account, the Dropbox app will pick up where it left off, and resume uploading them.