In case of Dynamic catche when you are inserting a new row it looks at the lookup catche to see if the row existing or not,If not it inserts in the target and catche as well in case of Static catche when you are inserting a new row it checks the catche and writes to the target but not catche
If you cache the lookup table, you can choose to use a dynamic or static cache. By default, the lookup cache remains static and does not change during the session. With a dynamic cache, the Informatica Server inserts or updates rows in the cache during the session. When you cache the target table as the lookup, you can look up values in the target and insert them if they do not exist, or update them if they do.