System dynamics modeling focuses on understanding the overall behavior of complex systems over time using stocks, flows, and feedback loops. It represents interactions between components while ignoring smaller details. To create a system dynamics model in AnyLogic, you first define the system components and relationships, build the model by adding components to the graphical editor, specify equations for variable changes over time using properties, set initial stock values, connect variables to model feedback loops, run the simulation by configuring settings, and analyze results with graphs.