Reddit reviews Being a Dog

One of mine does this all the time as a way to avoid intense social interactions. He sees a new dog, sniffs briefly, and if the other dog pays too much interest or gives any clues about wanting to play he veers off to pee on something. It totally avoids the confrontation and stress of the excited social interaction. Once they get through the ritual of peeing and sniffing it, they shake off and calm down, can hang out without undue focus on one another.

"Being A Dog" by Alexandra Horowitz is a good read that goes into a detailed discussion of scent marking as a means to convey information socially.