A dynamic website is a website that is built by using a template and a CMS. Content management system gives you control on how do you create a your web page pulling in information from various sources from a database.That means the web pages does not exist unless someone builds them for you. For example you run a online shopping website and sell more than 10,000 products which you sell online . For creating a website such as this. You are not going to build a 10,000 web pages each for each product manually. Instead you use a content management system to build the pages dynamically on the fly.
A CMS actually generates the page which a search spider crawls by taking the information in your database and plugging it into a template web page so that the CMS creates the tags, content and the code which ultimately is seen by the search engines.However one important thing to remember is its extremely essential to have a search marketing friendly CMS for creating a dynamic website.Any CMS that allows you to completely have access to these individually pages on a granular level alllows you to create tags, meta tags, keywords and titles are considered search friendly. Having these features allows you also to have a control on the entire content of the web pages. You should be able to make changes in the tags, H1 tags,edit keywords and descriptions.
In short any CMS which does not allow you to control individual page wise level seo.. is not seo friendly. You can use wordpress or Pixelsilk ,which are both open source.For search keep these things in mind when you are deciding the CMS 1) It should be able to customise HTML templates 2) Should allow you to produce unique Title tags' 3) You should be able to add meta description keywords on your own 4) produce and change H1,H2 h3 tags at will 5)categorise and create content by groups