SSAS Named Sets - Static Vs Dynamic

Named sets were there in MS SQL Server since beginning. They were only static in SQL Server 2005, but with SQL Server 2008, we have dynamic sets as well.

Also, this is one of the popular questions which are usually asked in BI interviews. The intent in asking this question is not to ascertain that candidate knows the difference between static and dynamic named sets, but to find out whether the candidate knows the intricacies involved in using named sets. What business problems it does solves for us. What are the guidelines to create named sets?