'Smart Categories' or 'Collections' based on manual pinning are static and don't change based on performance. Using SKU conditions allows merchants to create dynamic 'Categories' with specific SKUs.
'Pinning' in merchandising would mean to promote products to the top position on a 'Category' or 'Collection' irrespective of any change in visitor engagement and catalog information (Inventory, Size, e.t.c). This also indicates that products will remain static at their positions irrespective of their performance. But with 'Dynamic Pinned Sorting' the same set of products can be dynamically sorted among themselves, enabling products that perform better within the specific SKU set, to reorder based on sort order (not static) to increase CTR.
Dynamic Pinned Sorting is a feature where a category or collection can be created using a specific SKU set and also be with all the merchandising capabilities of Tagalys.