Dynamic and Lexical variables in Common Lisp

I am reading the book 'Practical Common Lisp' by Peter Seibel.

In Chapter 6, "Variables" sections "Lexical Variables and Closures" and "Dynamic, a.k.a. Special, Variables". http://www.gigamonkeys.com/book/variables.html

My problem is that the examples in both sections show how (let ...) can shadow global variables and doesn't really tell the difference between the Dynamic and Lexical vars.

I understand how closures work but I don't really get whats so special about let in this example:

(defvar *x* 10)

(defun foo ()
  (format t "Before assignment~18tX: ~d~%" *x*)
  (setf *x* (+ 1 *x*))
  (format t "After assignment~18tX: ~d~%" *x*))


(defun bar ()
  (foo)
  (let ((*x* 20)) (foo))
  (foo))


CL-USER> (foo)
Before assignment X: 10
After assignment  X: 11
NIL


CL-USER> (bar)
Before assignment X: 11
After assignment  X: 12
Before assignment X: 20
After assignment  X: 21
Before assignment X: 12
After assignment  X: 13
NIL

I feel like there is nothing special is going on here. The outer foo in bar increments the global x, and foo surrounded by let in bar increments the shadowed x. What's the big deal? I don't see how is this supposed to explain the difference between lexical and dynamic variables. Yet the book continues like this:

So how does this work? How does LET know that when it binds x it's supposed to create a dynamic binding rather than a normal lexical binding? It knows because the name has been declared special.12 The name of every variable defined with DEFVAR and DEFPARAMETER is automatically declared globally special.

What would happen if let would bind x using "normal lexical binding"? All in all, what are the differences between dynamic and lexical binding and how is this example special regarding dynamic binding?

Solution

When a variable is lexically scoped, the system looks to where the function is defined to find the value for a free variable. When a variable is dynamically scoped, the system looks to where the function is called to find the value for the free variable. Variables in Common Lisp are all lexical by default; however, dynamically scoped variables can be defined at the top level using defvar or defparameter.

A simpler example

lexical scoping (with setq):

(setq x 3)

(defun foo () x)

(let ((x 4)) (foo)) ; returns 3

dynamic scoping (with defvar):

(defvar x 3)

(defun foo () x)

(let ((x 4)) (foo)) ; returns 4

How does the let know if a variable is lexical or dynamic? It doesn't. On the other hand, when foo goes to find the value of X, it will initially find the lexical value defined at the top level. It then checks to see if the variable is supposed to be dynamic. If it is, then foo looks to the calling environment, which, in this case, uses let to overshadow the value of X to be 4.

(note: this is an oversimplification, but it will help to visualize the difference between the different scoping rules)