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Better to define what "Dynamic" means.
As Stewart says, each process instance gets a name, and you define how the names are built in the process model. What "Dynamic" means is that you put variables in the definition of the process instance display name. So, each one will be different in some ways, and the ways that they're different are based on your variables.
For example, let's say your process handles user requests. If you take the unique ID from each user request object and stick that in the display name, when you go to monitoring you'll see "Process User Request 1124" and "Process User Request 995" and "Process User Request 1127". If you were looking for 995, you'd know which one to click on.
You do that by making the name "Process User Request" & pv!userRequest.uniqueID (depends on how the process variable is built)
That's all it means. It's good to use as much as possible, but there are some instances where you're not doing a thing that has multiple different ones you'd need to separate out, like "Process All Outstanding Invoices". What variable do you cram onto the end of that name? So when applicable, you can ignore it.