Dynamic range is a measure of the range of tones the sensor can capture. Cameras with low dynamic range will often show 'blown' highlights or blocked-in shadows. This test is carried out in controlled conditions using DxO hardware and analysis tools.
Dynamic range is measured in exposure values (EV). The higher the number the wider the range of brightness levels the camera can capture. This falls off with increasing ISO settings because the camera is having to amplify a weaker signal. Raw files capture a higher dynamic range because the image data is unprocessed.
Panasonic GX8 dynamic range charts
JPEG dynamic range analysis: The GX8 produces JPEGs that have a consistent tonal range throughout much of its sensitivity range, with good detail in shadows and highlights.
Raw (converted to TIFF) dynamic range analysis: The GX8's high dynamic range score continues into the upper sensitivity values, confirming our findings that raw files have a good range of tones.