Dynamic memory refers to a type of computer memory that can change in size during program execution. Unlike static memory, which has a fixed size, dynamic memory allows programs to allocate and deallocate memory as needed. This flexibility is essential for handling varying amounts of data, such as when processing user input or managing large datasets. In programming, dynamic memory is often managed using functions like malloc and free in the C language. These functions enable developers to request memory from the system and release it when it's no longer needed, helping to optimize resource usage and improve application performance.