Dynamic Merge Variables, which are only supported in the HTML Upload creative design type, allow you to customize each creative sent to each recipient based on attributes of the recipient. For instance, if you wanted to merge the recipient's first name into the creative sent to a recipient, you would use Dynamic Merge Variables to achieve this. In addition to standard audience member fields such as first name and last name, you can also merge custom audience attributes. This can be used to merge both images and custom text. For example, if you are an e-commerce company that has physical stores, you could use this to merge the address and hours of the recipient's closest store.
For in-depth details on how to use Dynamic Merge Variables in your creative, please see this article.