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Static routing is when you statically configure a router to send traffic for particular destinations in preconfigured directions. Dynamic routing is when you use a routing protocol such as OSPF, ISIS, EIGRP, and/or BGP to figure out what paths traffic should take. There are very few situations in the real world where you would use one method of routing exclusively. A typical network will use a dynamic protocol such as OSPF to determine the best routes within an enterprise, BGP to determine the best exit points to the rest of the Internet, and static routing to glue it all together with reasonable default routes, and to send specific traffic over specific paths for traffic engineering reasons.
(Answered by Brandon Ross, VP of Operations, Sockeye Networks.)
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