Dynamic groups are useful because they will always automatically update based on the settings you created the group with. They can be created for students or faculty.
For example if you wanted to create a group of your current sixth years you could do so by going to Advanced Search at the top of the page. Set the Course equal to Leaving Certificate, the Course Year equal to 2 and the Enrolment equal to Current.
When you have your parameters set, click Search.
On the resulting screen you will see your list of students, click Save Search in order turn this list into a dynamic group. This means that if a student leaves or joins sixth year, the group will automatically update to show this.
Clicking Save to Group will change it to a Free Form group populated by sixth years that can be manually edited.