WD in a nutshell is a good book, and in that vein, yes, that is a good definition of what DHTML is. I guess I just never really liked the term "DHTML" because the "D" doesn't really belong with "HTML." A good website is a dynamic website -- it has user authentication, and new content on a fairly regular basis. A bad dynamic website has stupid ads that fly across the screen, making it impossible to close that stupid window until it stops moving.
You would never say that your tires get good gas mileage. No, your tires are simply a component of the car -- the car gets good mileage because of a combination of different technologies installed on it. That might include the tires, but the tires themselves don't get good mileage.
In the same way, HTML can't be dynamic. By it's very nature, it is NOT dynamic. Neither is javascript, or PHP, or Flash. They are just technologies. The combination of these technologies, including HTML, is what makes up your website. The website itself, if it's put together with the right tools, is dynamic.
I don't mean to sound so preachy, but I have actually been turned down for jobs because I didn't put DHTML down as one of my areas of expertise. I did have Lotus Domino, Java, Javascript, ASP, and PHP on there, but one of the first questions asked was "I don't see DHTML on here (it was listed as a requirement for the job). Do you know DHTML?" I really wanted to respond "what are you, stupid? What do you think all those things I have listed do?" I didn't. I simply replied "yes, I do know Dynamic HTML." But by that time I think the guy wrote me off his candidate list. He got that glassy look in his eye that says "doesn't matter what you say now, you're screwed."
Anyway, yes, the O'Reilly books are very good, and that one is no exception. Don't forget to look around the web for information on CSS and XML. There is a lot of good information out there.
I suggest looking at webmonkey.com, devguru.com, and if you really want a treat in CSS and Javascript, check out www.brainjar.com. Cool stuff there.