Dynamic XML means dynamic data that is in an XML format.
Another popular use of this term also refers to information which is extracted from a database (commonly a relational database) and placed into XML 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.
References
Dynamic XML Wikipedia(Text) CC BY-SA