So it is light that makes one area brighter then the surroundings or highlights that area basically?
no, light that can move, rather than being stuck in one place, in other words, static.
compare dynamic shadows to static shadows. static shadows do not move. dynamic shadows move.
with that torch, you can pick it up, and its light will go out, you can then equip it, and the light will be centered on you when you move. if the light was static, it would be stuck to its position with no way to move it.