A dynamic IP address is a temporary numerical label assigned to a device connected to a network that is constantly changing. Unlike a static IP address, which remains the same, a dynamic IP address is assigned by a server and can change each time the device connects to the network. This allows for a more efficient use of available IP addresses and provides a level of anonymity for the user. Dynamic IP addresses are commonly used in home networks and by internet service providers to manage their network resources. They also play a crucial role in maintaining the security and stability of the internet by preventing unauthorized access to devices.