Applying a Dynamic Template to your blog is simply a matter of going to the Template selection on the dashboard menu. The Dynamic Templates, labeled "Dynamic Views", are simply one more selection in the Templates menu selection, along with "Simple", "Picture Windows", and "Awesome Inc.".
Having selected "Dynamic Views" in the main Templates wizard selection, you get the smaller 7 selection array, where you can select the default view.
Having selected the default view, the live preview window at the bottom will show you what your blog will look like. If the preview is acceptable, simply hit the "Apply to Blog" button, and the dynamic template is applied to your blog.
(Update 2014/04/04): Time has passed - and now blogs with dynamic templates have the same dashboard selections, as blogs with non dynamic templates - including "Layout". Also, Blogger discontinued both the ability of the "/view" and "?v=0" modifiers, as used to dynamically switch between dynamic and non dynamic views.
When the blog is setup to use a dynamic template, and should you be using the New Blogger GUI, you will find that you do not have the "Layout" menu selection. Only the "Template" menu selection will be available, allowing you to access the "Template Designer" wizard (using the "Customize" button).
Without changing the template, you can temporarily display the blog using a dynamic template, by adding the modifier "/view" to the URL.
Should you later decide that the Dynamic Views do not acceptably display your blog, you can return to your template, exactly as in use immediately before you applied the Dynamic View. Again from the Blogger "Template Designer" wizard, click on the link at the top "Revert to previous template". Viewing the live preview window, you should see your blog, displayed with the original, static template. Then hit "Apply to Blog", and your blog will be back as previously.
Note as observed some time ago, your ability to use the live preview window is subject to the layered security settings on the browser and computer in use.
Without Reverting the template, you can temporarily display the blog using a normal (non dynamic) template, by adding the modifier "?v=0" to the URL.
So, try out the new Dynamic Templates on your blog - if the known limitations do not seem a problem to you. Both applying - and removing - the dynamic views is a simple 30 second task.