"Dynamic campaign" mean that
AT LEAST (thanks elainba) AI reacts on player decision.
When I played SH3 at one mission I attacked the Gibraltar and sunk all merchants at this port. At SH5 I attack small convoy near Gibraltar, after few hours I was hunted by 20 DD!
SH5 has dynamic campaign. Game is not perfect, but very close to it... with mods, of course...