Dynamic serving signals Google to display different HTML and CSS for the same URL, depending on which device the user is using.
HTML is read based on what type of device is reading the page. While successful dynamic serving is highly dependent on User Agent tags alerting Googlebots of mobile content, it’s actually a rather beneficial practice for SEO because it only uses one URL for the site (Managed Admin).
With responsive design, you only need to be concerned about one page with one set of content. Dynamic serving websites require you to maintain multiple custom pages and multiple sets of content, but in terms of mobile user experience, custom layout and content can work to your advantage. Sometimes, the better strategy is to appeal to mobile users differently than you would desktop and tablet users.
Dynamic serving is the best option for targeting feature phones, which can’t handle responsive design well. Dynamic serving is also the best option for those who want to be targeting a separate set of keywords for mobile search. To learn more about the pros and cons of dynamic serving, as well as gain insight to help you better determine whether responsive design is a better option for you, check out this great article on mobile design on Bruce Clay.