Dynamic range is the difference between the softest and the loudest part of a situation. This of course, varies, depending on the situation you are in. Dynamic range is generally specified in dB, but as it is a ratio of two dB values, there is no reference needed.

Consider the dynamic range of human hearing:

All these values are in dBSPL, and the dynamic range of hearing is said to be 130dB.

Now consider the case of the rock concert. Take the dynamic range at the vocalists mic. During pauses, the level might be 40dBSPL, i.e. the sound of the auditorium (if it were quiet), and then it might be 120dBSPL when the vocalist is shouting into the mic. Thus the dynamic range at the mic would be 120 - 40dB i.e. 80dB. From the sound system point of view, we would be more interested in the quietest vocal passages - which might be more like 70dB - so the dynamic range of the performance would be 120 - 70 i.e. 50dB. To be able to reproduce the performance with all its dynamics, our system, meaning all the components, would have to have a dynamic range of 50dB. If it doesn't, then we will need to compress the performance dynamics.