An unequippable, weapon item that can be thrown by a character to cause damage on a targeted area. To use it, you right-click the item and a green targeting symbol appears on the ground that you can move around with your mouse and click to throw. If you move the target symbol out of range, the symbol turns red.
Characters with Engineering profession make most of the dynamite available, but some dynamite can be acquired as quest rewards. Lower skilled engineers make 
[Rough Dynamite] only engineers can use, but higher skilled engineers can make a form called EZ-Throw Dynamite that anyone can use.
Also see Bomb.