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What are dynamic labels?
Dynamic labels are placed on-the-fly in ArcMap. Label text is dynamically generated by a labeling expression that is stored in the layer being labeled. This layer can be saved as part of the .mxd, or separately as a .lyr file. Label text position is dynamically determined based on label placement properties that are also stored in the layer being labeled. Labels can respect the data frame reference scale on a layer basis, in which case both the data frame reference scale and text symbol size determine the size of text.
When there is no data frame reference scale, labels stay the same size while zooming in and out. Create new labels by:
A. specifying labeling properties on the layer properties dialog box and
B. turning on the labels for that layer.
Editing individual labels cannot be done; however, it is possible to edit the expression used to generate all of the following:
A. The label text string.
B. The symbol used to draw the label.
C. The properties that control placement of labels in a layer or label class.
To edit individual pieces of text, convert the labels to annotation.
Learn more about options for storing text in ArcGIS, refer to the link in Related Information.