I consider a dynamic medium to be any medium for expressing ideas that can respond to actions or changes made by the recipient of the message.
This includes but is not limited to face-to-face conversations, spreadsheets, video games, text-based games, and most forms of simulation that the user can control or direct, such as physics or chemistry or biology simulations.
There are many of them.
You interact with them using whatever input and output devices the computer and the simulation support, including but not limited to keyboard, mouse, video, microphone, light pen, touchscreen, camera, game controller, VR headset, and position sensors.
It mediates any idea that one human wishes to communicate to another, and is especially useful for ideas that involve systems that change over time. For example, spreadsheets are often used to simulate and communicate information about projected earnings and expenses. One person creates a spreadsheet that embodies a certain model of how the organization works and certain predictions about what is likely to happen. They then give it to another person, who can explore the model and see what it predicts if different choices are made or different events occur in the near future.
What type of literacy it supports depends on the medium. Spreadsheets have probably done a lot to improve financial literacy. Video games have helped many people to understand how virtual combat systems work. (Whether or not that is useful information to know is beyond the scope of this comment.) Physics simulations help people to better understand Newtonian physics in an intuitive way, and to make fewer Aristotelian assumptions.
Ultimately, once we have a dynamic medium that anyone can use to express their ideas, meaning a personal dynamic medium, it may support deeper thinking about processes and systems in general.
Personally, although I don't think it will happen in our lifetime, I like to hope that it will ultimately make us smarter all the way around and help us to understand and solve our really big problems, like poverty, pollution, corruption, and war.