Time dilation and redshift are tightly connected to each other.
A thought experiment
Imagine an alien in a distant galaxy pointing two lasers towards earth. One is very long wavelength and the other is very short. The alien has arranged things so that at every cycle of the long wavelength laser, they send a short pulse of short wavelength. You can imagine the short pulse being emitted at the same time of one of the crests of the long wavelength laser.
If we call $\lambda_L$ the long wavelength (as measured by the alien), then the other laser emits pulses at intervals of $\Delta t =\lambda_L / c$ (as measured by the alien).
What do you see from Earth? Well, because of redshift, you get a wavelength $$\lambda_L' = (1+z)\lambda_L.$$ At what intervals do the pulses of the other laser come? Well, in vacuum, the group velocity of light is the same as the phase velocity, if the short pulse is emitted at the same time as one of the crests, it will arrive to you at the same time as the crest. So it will arrive at intervals of $$\Delta t' = \lambda_L'/c = (1+z)\lambda_L / c = (1+z)\Delta t.$$
This is time dilation. The alien can use $\Delta t$ as a unit of time, and measure all its activities using that unit. If they celebrate new year's eve every $10^{10}\Delta t$, you will see the fireworks every $(1+z)10^{10}\Delta t$.
(We ignored the fact that the laser pulse will spread. You think of the modulation of the maxima of intensity of the short laser, or sending the pulses every $n$ crests, so that the spread does not cause overlap. Anyhow, GR allows for massless point particles, so you can just think of that.)
Confusion alert
Note that when I said `see' above, I meant it. It is a description of observations of EM phenomena on Earth. There is a lot of confusion out there when talking about time-dilation in relativity.
Look at this example. Every bit of the discussion I did above applies equally well for observers that are receding from you in Minkowski spacetime, where $z>0$. It leads you to conclude that when an alien is moving away from you in a spaceship in flat space you see them in slow motion.
But you could run the same discussion with the alien coming towards you in Minkowski spacetime, with $z<0$. In that case, you would conclude that you see the alien sped up. But we both know that that can't be right, can it? Didn't we learn that time goes slower when a system is moving relative to us?
Different meanings of time dilation
To clear up this confusion, let us be a little more formal. Let's start in an inertial frame $(t,x)$ in Minkowski space (we only need 1+1 dimensions). Have an observer trace a worldline given by $x = f(t)$. Then time-dilation is the statement that
$$\int_{t_0}^{t_1} dt \sqrt{\eta_{\mu\nu}{\dot x(t)}{\dot x(t)}} < t_1 - t_0,$$
or, in words, that the proper time elapsed along the trajectory between events $(t_0,x(t_0))$ and $(t_1,x(t_1))$ is less than the difference in the coordinate times $t_1-t_0$.
Ok, but remember that coordinates don't mean much in relativity, and you should be careful when interpreting them. If you don't connect them to some coordinate independent thing, you risk getting in trouble.
For example, in the twin paradox, you have Bob at sitting at rest at the origin of the coordinates, and Alice in her rocket that starts at the origin and comes back to Bob. Now we have two worldlines that intersect twice, and we can ask: how do the proper times along Alice's and Bob's worldline compare? Bob is sitting at the origin of the the inertial coordinates, so his proper time is just the difference in the coordinate's time, i.e. the right-hand side of the equation above. So now we can give an operational meaning to time-dilation, without invoking coordinates: when Alice and Bob meet again, Alice's clock has ticked fewer times than Bob's.
But does that mean that Bob sees Alice moving in slow motion? No. The statement above is about the comparison between two event that happen when Alice's and Bob's worldlines meet, while Bob sees is a question about events along Bob's worldline only. More precisely, it's a question about events where photons leaving Alice intersect Bob's worldline. So to answer what Bob sees, we looks at the discussion above with redshift. Bob sees Alice redshifted for a while (and thus in slow motion) and blueshifted towards the end of the journey. See my answer here for more detail.
Cosmological time
So we have two different concepts of time dilation. Which one is better? It depends on the application. Note that the one about comparing clocks does not apply to the receding galaxies.
Note that your derivation that $d\tau = dt$ for all comoving observers is absolutely right. In the FLRW metric, there exists a coordinate system so that the time coordinate equals the proper time of most galaxies. This is also the coordinate in which most galaxies are at rest. However, to do astrophysics, you need to translate these facts into things you can observe from Earth. Well, the distance between galaxies (as measured by photon time-of flight) increases, and the light from galaxies is redshifted and distant astrophysical phenomena are seen running in slow motion.