Static Content is simply a content item which is managed outside of the dynamic content management structure of Mambo. It is also referred to as "Typed Content" in older versions of Mambo. Static content in Mambo is NOT the same as static HTML and this difference often misleads people.
Mambo is a dynamic content management system and content should always be primarily dynamic, but static content items are useful for dead-end pages that don't change, such as for a privacy policy page, or terms and conditions of use. In other words, use static content for independent, stand-alone pages.
Because static content items are managed outside of the content management structure, they are cannot be part of a Section or a Category. Static Content cannot be added to a blog, cannot be archived, and have a number of other, less obvious, limitations.
Static Content pages can be created, edited and deleted in the Static Content Manager. They will not show up under the listing of dynamic content items and don't appear in the list of "all content".
Used wisely, static content items can be a useful addition to your site. If you use static content items for your whole site though, you will find many of the features of Mambo just won't work for you. Mambo is designed for dynamic, database-managed, content management.