Dynamite is used to instantly clear a large area of land without using energy.
Tap on the dynamite and choose the spot near the area that you would like to clear. After placing the dynamite, you will see the highlighted area showing which obstacles will be removed.

Dynamite becomes available after starting your adventure at Madeline’s house ("Stan Fogg's First Clue" expedition on the game map).
You will receive one dynamite during the initial tutorial. After that, you can purchase it separately in the game bank.
 
How to place the dynamite?
Tap on the dynamite icon and then select the spot where you want to place it. If it's not possible to place it, the dynamite will be highlighted in red.
 
 
Try moving the dynamite a little until the red highlight disappears.