DynamicTemplates are kind of like functions that take a single parameter, object, and return a string. The returned string depends on what you put in the "Text" field.
This is the default for NotCarrying:
"You are not carrying " + object.article + "."
Quest will evaluate that and return it. Specifically it will join together the first string, the value of the article attribute of object (which will be "it", "them", etc.) and the last string (so the player might see "You are not carrying it."). You can call other functions, for example:
"You are not carrying " + GetDisplayName(object) + "."
The GetDisplayName function will get the name or alias of the object as well as its prefix, so now the player might see "You are not carrying a ball."
You could do both. You can access other attributes on other objects too:
player.name + " is not carrying " + object.article + ". And by " + object.article + " I mean " + GetDisplayName(object) + "."
The player might see "Mary is not carrying them. And by them I mean some rocks." You can use functions and attributes you have added yourself too. It is very flexible.