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.
Sony A6300 dynamic range charts
JPEG dynamic range analysis: Lab testing shows a great performance with regards to dynamic range at lower and higher sensitivities next to its immediate rivals, with just a slight dip in the ISO3200-6400 region. Nevertheless the X-Pro2 does a little better for much of the sensitivity range.
Raw (converted to TIFF) dynamic range analysis: Dynamic range in raw files starts at a reasonable level, although by ISO400 this starts to slip, and at the highest settings performance from the Panasonic GX8 and Olympus Pen-F is considerably stronger.