Many front projectors today use an iris to make dark scenes darker. Products that may use this are DLP, LCD, and SXRD based light engines. These irises will be open on a bright scene and close as the scene darkens.
The reasons these products have included this feature are two fold. One is as a way to darken the image in dark scenes and improve the image contrast in these scenes. The second is to compete specification wise with products that use DILA technology that has high contrast without a dynamic iris.
How projectors with dynamic irises compare to high native contrast products like DLIA is what matters. In practice many of these irises are unfortunately obvious. The two obvious problems are that they can be noisy and cause the image brightness to vary unnaturally. These problems can also get worse as the product ages because the iris mechanism wears. The third problem I see are scenes with a few bright elements in a generally dark scene the bright elements are obviously dimmed. The fourth problem I see is the factory calibration of this feature can vary wildly. Some samples of the same product can work without obvious problems while with another projector the dynamic iris is so anoying it is unusable. Sony appears to do this the best of every manufacturer I have seen, but unfortunately SXRD has had significant reliability problems resulting in law suits.
To summarize focusing on a single specification like on/off contrast is a mistake. Many projectors that use technologies that do not have the highest on/off contrast can look as good or better than products that have darker blacks natively or use irises or dynamic lighting to obtain higher contrast. Having good color, sharp images, proper light output, high ANSI contrast, quiet operation, appropriate lens shift, a throw ratio that fits application, good motion processing and accurate inter image contrast are other things to weigh as well in choosing a projector.