Dynamic IP Update Service is simply a way of attaching a static hostname to a dynamic IP address.
On the Internet, there are a limited number of IP addresses. When you connect to your ISP, you are assigned a temporary IP address that other computers use to find you while you are connected. Once you disconnect, that IP address is given to someone else, and so on. If you are trying to operate a gaming server, personal web server, or any other service that requires other computers to be able to find you, they need to know what your IP address is. This is not easy if your IP address is dynamic, like most people's are, because you will have to keep telling everyone what your current IP address is