There has always been on-chip memory (core private memory and caches). Dynamic Caching refers to the use of on-core memory by the shaders. It has nothing to do with UMA.
I have always thought the UMA RAM was filling the roles of system memory (CPU) and graphics memory (GPU)...?
So rather than having the GPU cores "locking down" X amount of UMA RAM, the Dynamic Caching allots what is needed as it is needed...?