“Dynamic fiction” is a term suggested by Caelyn Sandel some months ago to describe her work, especially but not limited to her serial story Bloom.
As I understand it (and I hope I’m not misrepresenting too much here), the term is chosen specifically to get around some of the expectations people have when they hear the phrase “interactive fiction.” Dynamic fiction allows minimal plot branching, if any: the reader is not being allowed to change the course of events, which may be completely linear. From a CYOA structures perspective, we’re talking about structures that either look like a friendly gauntlet without delayed consequence, or structures that actually literally are a straight line.
Instead, the interaction in a dynamic fiction story is doing something else: it’s providing pacing, it’s creating a sense of identification with the protagonist, it’s eliciting complicity with what happens or demonstrating the futility of the protagonist’s experience.
To answer the question “why isn’t this just a short work of static fiction?”, I’ve picked out what I consider the best exemplars of each of the major dynamic fiction effects I’m aware of.
Emily Short's Interactive Storytelling 