Dynamic memory allocation allows programs to request memory from the operating system at runtime. This memory is allocated on the heap. Functions like malloc(), calloc(), and realloc() are used to allocate and reallocate dynamic memory, while free() releases it. Malloc allocates a single block of uninitialized memory. Calloc allocates multiple blocks of initialized (zeroed) memory. Realloc changes the size of previously allocated memory. Proper use of these functions avoids memory leaks.