Dynamic microphones have a boosted sensitivity in the mid-range frequencies and the presence regions (around 5 kHz), making them perfect for warm and intelligible vocals. They are renowned for their robustness and can withstand high-pressure instruments like the kick drum. Most popular dynamics, such as the SM57, come equipped with a windshield inside the wire mesh, blocking out harsh popping sounds.
The heavy coil diaphragm in the dynamic microphone cannot move quickly, which means a decrease in frequencies after 8 or 10 kHz. Also, dynamic mics aren't very sensitive. Low-output sound sources require more gain, making them noisy.
All dynamic microphones are directional, meaning that a sound source facing the microphone will be louder than one from behind it. Most dynamic microphones have a cardiod pickup pattern, which looks like an upside-down heart.
All pressure-gradient (directional) microphones experience a "proximity effect"---a boost to the bass frequencies---when the sound source is closer than 3 feet. Some dynamic microphones have a built-in switch to compensate for this, although the bass boost can be beneficial when recording guitar cabs or vocals.
Most dynamic microphones are inexpensive. The popular SM57 costs $109, while a slightly more gourmet SB7 will set you back $350.
Unlike condensers, dynamic microphones do not require batteries or external power.