Dynamic groups contain a group name and membership criteria:
Nested groups enable the creation of hierarchical relationships that are used to define inherited group membership. A nested group is defined as a child group entry whose distinguished name (DN) is referenced by a parent group entry attribute.
Dynamic and nested groups simplify WebSphere Application Server - Express security management and increase its effectiveness and flexibility. You only need to assign a larger parent group if all nested groups share the same privilege. Assigning a role to a single parent group simplifies the runtime authorization table.