Dynamic Memory for Hyper-V is a new feature that helps distribute memory to the virtual machines hosted on the physical server. Previous to SP1 you would allocate memory to a virtual machine based on what you assumed the VM would need. Now with SP1 for Windows Server 2008 R2 you can choose whether your memory is static or dynamic and with dynamic you can set startup RAM values, maximum RAM values and the amount of memory to reserve as a buffer.
Startup RAM is the amount of memory allocated to a virtual machine and reported to the guest operating system BIOS while maximum RAM is the total amount of memory that will be given to a virtual machine. The default for maximum RAM is 64GB.