Does iOS 8 support dynamic linking?
"Embedded" and "Dynamic" frameworks don't refer to the same aspect of frameworks. They are not the opposite of one another. First, let's define what's a framework: in Apple lingo, a framework refers to some compiled code + the public headers of said code.
Now a dynamic framework is a framework whose code was built as a dynamic library. It is the opposite of a "static" framework, where the code would be built as a static library. In case you're wondering, Wikipedia has a very nice explanation of what's the difference between a static and a dynamic library.
And finally, an embedded framework is a framework that is packaged within an app, as opposed to being installed system-wide, in "/System/Library/Frameworks" for example.
An embedded framework is simply one that's included in the app bundle, rather than a global framework which is installed in system directory.
Dynamic Frameworks doesn't means dynamically linked framework. Apps still just work in a sandbox environment. It's not like your custom frameworks are going to be installed with the iOS. Each one of your apps that uses the common framework that you've developed is going to be copied inside every app's bundle.
You can see this for yourself. Go to your Xcode's Derived Data directory and inside the app's data, you'll find all the embedded frameworks copied.
The only new thing with creating Frameworks with iOS 8 compared to static libraries is that the public header files and assets gets bundled within the Framework. If you've been doing this sort of things with earlier versions of Xcode, you'll remember the pain with supplying public headers and then adding the search path within Xcode settings and for assets we had to pass in a separate bundle.
This only downside of using Frameworks that I see is that now we can't simply use lipo to generate a fat static library for all kind of architectures.
IMO Apple is using the word 'dynamic' to suggest 'independent'.
Watch WWDC2014 - Building Modern Frameworks for more details.