A way or organizing different types of data in the phone's memory. Also referred to as Shared memory.
Dynamic memory means that all types of data are stored in the same memory (there is no separate memory for photos, ringtones etc.).
An advantage of dynamic memory over partitioned memory is that it is more flexible - with partitioned memory, you can fill up the photo memory for example and you won't be able to take any more photos even if other types of memory are free.