All the descriptions given so far explain it very well. I never use the term micro-dynamics because it is vague and often misused. It's all about resolution, the ability to hear subtle details all the time (other instruments louder, even conflicting). The higher resolution lets you hear 'into' the presentation still able to hear the more subtle things clearly, and in the right position and with the correct timbre. It can be very elusive at times, depending on your state of mind, hearing on that day, and of course, the equipment. Unless the equipment is first rate, the rest doesn't matter much, though.
One example might be a very lightly played ride cymbal (or hi-hat). If you have high resolution (micro-dynamics, I guess) you'll be able to hear it in the mix clearly regardless of what other instruments are doing. It will have the same tonal characteristics, harmonics, as if it was playing by itself. In a lesser system you might hear it only during its louder playing, and it may not be musically distinct with its own sound. Any form of percussion played lightly, bells, triangles, effects added during mixing, a lightly strummed acoustic guitar, two guitars mixed together, etc., really make the recording more interesting, but on some systems you might not even notice them.
That's detail and resolution and often goes hand in hand with the musicality of a system.
--Bill