What does "dynamic permissions" mean? What does dynamic permission mean, in Drupal 8?
When should I use this?
I consider it generating permissions based on some data within your site.

For instance, I wanted to create permissions based on terms or vocabularies for roles, in regards to if they could use the functionality a contrib module I maintain provides:

http://kevinquillen.com/drupal/2016/02/21/dynamic-permissions-in-drupal-8

If you look at the NodePermissions class, it does something similar.