With a normal (-static) web page the web-server does not look to the content of the requested file. The server just retrieves the right file and sends it straight back to the requesting browser.
With a dynamic web-page, the web-server plays a more active role. Before the requested file is being sent to the requesting browser, it is being parsed by the web-server.
The server first interpretates any scripts (i.e. PHP, ASP or Cold Fusion) within the dynamic web-page and executes them, before the page is being sent to the requesting browser.
Dynamic web-pages provide a wide variety of possibilities for your website, like: easily updating content on your website (-in person), without the need for any knowledge of web-design or technical details on your side, automated guest books, fully functional on-line web-shop with CMS (Content Management System), stock keeping- and payment possibilities.)
Also, very efficiently, it provides you with booking- and payment-possibilities (JomRes, PayPall, Intuit) for stores, events, localities, hotels, guesthouses, restaurants, etc. , etc...
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