I believe it will update your home point based on your remote control or display device, assuming at least one of them has GPS capability. For instance, the Inspire remotes have GPS in them. The Phantom remote does not. But, if you are using a phone or tablet that has GPS as your display device, and you have enabled dynamic home point, then as you move around, your home point is updated, at most, once per second.
This can be useful in the following type scenario. You are having your P3 follow you and you are in a boat. If you travel across the lake, but the home point is back where you started, returning to home doe you no good. But, using dynamic home point, it gets updated every second as you travel across the lake. Now, if you issue a RTH, it will come to your last updated location, which should be VERYclose to your current location, assuming you have now stopped the boat.
