What does the dynamic global hostname option in sharing settings do? Can anyone explain what this option does?
All computers running Mac OS X contain a feature called Bonjour. It works by sending multicast DNS packets out onto your current network to advertise your computer’s available services. This is how iTunes Sharing works; your computer tells other computers that it has a shared iTunes library available, and gives the computers instructions on where to connect to it. Over the past few weeks, I have been experimenting with an extension of the service called Wide Area Bonjour. Instead of sending out multicast DNS packets to your local network, it sends out similar packets to an actual DNS server, which with the correct authentication, updates actual zones in the DNS server. This essentially allows you to use the magic of Bonjour across many networks, or even the Internet. All that’s required is that each computer that is interested in your Bonjour domain has the domain listed in its “Search Domains” (or “DNS Suffix”).
The service I have been testing out is Global Hostname, which will host a Wide Area Bonjour-enabled zone for you, either on your own domain, or a subdomain of globalhostname.org. Apple’s AirPort product range feature Wide Area Bonjour to enable you to control your AirPort from wherever you are. 

Added:

Its purpose is to provide features similar to those offered by "Back to My Mac" without using the .Mac/MobileMe service. It requires that you have your own DNS server. If your service provider supports secure dynamic DNS update (RFC 3007), you can provide your Mac with a global DNS hostname so that other computers outside your local network can refer to it by name. Even if your computer’s IP address changes at regular intervals, your computer will automatically update its global DNS hostname to point to its current IP address. Your service provider or domain administrator will provide you with the necessary user name and password so your Mac can update its hostname every time its address changes. If your service provider supports Wide-Area Bonjour registrations, you can also select the “Advertise services in this domain using Bonjour” checkbox to advertise this computer’s active Sharing services in this domain. If the domain’s administrator enabled Bonjour browsing for this domain, other computers will see the services listed automatically in the respective application, based on the Search Domains entered in their Network preferences or based on information returned by DHCP. :)