Laws usually are observed and enforced within a specific static geographical territory. For example, in the US, jurisdiction is usually determined by city limits, county lines, state borders and national borders.
Polycentric law allows different legal institutions to operate within the same territory. Within a particular territory, persons may change from one legal institution to another.
A dynamic jurisdiction would allow participants to adjust their status dynamically. Instead of operating as rivals within a single territory, the various competing legal regimes would each have territory that is determined dynamically by the decisions of land owners. So a particular bit of land could switch from one jurisdiction to another, create a new jurisdiction, or opt out completely.
This could restrain the abuse of certain sorts of government power, since the "losers" from a discriminatory policy could withdraw their participation and tax revenues from the offending organization.
This is more complicated than static jurisdiction and probably incompatible with some applications. For example, it would be difficult (perhaps pointless) for a city water delivery system to use a dynamic jurisdiction, since people living in the middle of the city probably would not have access to an alternative.
Will this cause a "race to the bottom?"