It can mean a couple of things. Firstly, contrast ratio is the measured brightness of white on the screen, divided by the brightness of black. So if white is measured at 250 cd/m2 (candels per metre square) and black was 0.25 cd/m2, then you divide the first number by the 2nd and you get 1000:1.
Static contrast ratio means black and white measurement were taken at the same time. Dynamic contrast ratio means the reading were taken seperately with different content on the screen. The significance of that is that any LCD which has such a high contrast ratio will have backlight dimming, where the screen detects when it's showing a dark scene and drops the backlight level to give you a better black depth. However this would mean that everything on the screen would go dark, not just the black, so they compensate by increasing the voltage to the panel (basically amplifying the signal). Sadly this leads to dark scenes looking very messy and very low colours being brought out too much.
So dynamic contrast is both a specification, and it's also the term used for the for backlight dimming technique described above.
We've got a Samsung 37R87 LCDTV with Dynamic Contrast and we had to turn it off since it was ruining films with dark scenes.