iDynamic does not create more true sensor dynamic range. Like similar features from other brands, it typically protects highlights by adjusting exposure to avoid clipping bright areas, then lifts the darker tones afterward.

In practice, that means the camera captures the image a bit darker to save highlight detail, and then boosts the shadows/midtone areas in processing. The main trade-off is that lifting shadows also lifts noise, so darker parts of the image can look noisier.

For JPEG shooters, this can be useful because the camera applies the adjustment earlier in the pipeline, before demosaicing and while working with higher bit-depth image data than a finished JPEG. If you shoot RAW, you can usually make similar highlight/shadow adjustments yourself during RAW conversion, with more control. On many cameras, because exposure itself is changed, enabling this kind of feature can also affect the RAW capture.