Dynamic XML means dynamic data

Dynamic data

Dynamic data or transactional data denotes information that is asynchronously changed as further updates to the information become available....

 that is in an XML

XML

Extensible Markup Language is a set of rules for encoding documents in machine-readable form. It is defined in the XML 1.0 Specification produced by the W3C, and several other related specifications, all gratis open standards....

 format.

Another popular use of this term also refers to information which is extracted from a database (commonly a relational database

Relational database

A relational database is a database that conforms to relational model theory. The software used in a relational database is called a relational database management system . Colloquial use of the term "relational database" may refer to the RDBMS software, or the relational database itself...

) and placed into XML

XML

Extensible Markup Language is a set of rules for encoding documents in machine-readable form. It is defined in the XML 1.0 Specification produced by the W3C, and several other related specifications, all gratis open standards....

 format. Clearly this is a completely different case as it does not involve any updates to the data – and is in fact static data. In this context the word "dynamic" is taking the alternative meaning of "automated", in the sense that something which is performed dynamically is actioned without effort.