Salesforce Accounts vs. Dynamic Accounts

Are there specific scenarios for a regular Salesforce Account versus a Salesforce Dynamic Account?

I get that you can calculate and pass in details dynamically with the dynamic account, but is that for specific types of Salesforce instances? For example, I have credentials that teams have been providing for accessing their Salesforce instance, which don’t seem to work with just the regular account. However, I can login manually using the same credentials with my browser just fine. And when I do, I see the “domain” changes to things like or Is this is a scenario where I should use the dynamic account, and first do some kind of OAuth to a central login, which will provide me back with something like an instance URL to use?