thinking about it I guess he means that some people think flash is a niche tool and that FI have proved its not. To which I would say that flash certainly has its uses, even for some all-flash sites, usually with presentational content, but I'd still say that it's not suitable for most types of web site's requirements. But whatever.
Well, the guy I work with is a php junkie and hates anything flash ... or any animation or "slick" stuff period.

He's said to me time and time again that it's a "niche".

As far as it being suitable for most type of web site requirements, I don't see it. The only thing it doesn't do that I wish it did was allow for uploading of documents (I'm sure there's a hack for it, but I digress).

It doesn't cover ALL web functions, and in some cases it's better to use other options to make certain website functions. But for displaying content, displaying video (in page), allowing for more visually engaging motion, animation, music, and so on and so forth, it does it better than anything else.

The dynamic content thing is about the fact that most flash sites don't use it. So, people think it can't.

Again, hybrid sites are where it should be at. If I can make a more stimulating front end in flash than with html/php/asp then I'll go for it. If I want to make an admin form, create doc trees etc., I'll use php.