A static list is a predefined selection of a number of contacts that you have extracted from your CRM, for example. It is a one-time upload of contacts who should receive a specific mailing. You cannot use a static list in combination with a permissions-based unsubscribe package. As the name implies, it is a static list. Changes to profiles and permissions-based unsubscribes are not reflected. So suppose a contact unsubscribes, this unsubscription is not processed and you could email this contact again. You can use a static list for an internal mailing or when sending a service email about a legal notice.
With dynamic lists, you place filters that someone from the database must meet in order to get into that list. If you work with permissions for your newsletter, you have to work with dynamic lists. In your dynamic list you include the permissions. If someone unsubscribes, the contact no longer meets the permissions (the filter in your list) and will automatically disappear from the list. Therefore we generally recommend to use this option for your (marketing) mailings.
A contact can be in either a dynamic list or a static list.