Back in the 90s when I first started out with MFC I used to dynamically link my apps and shipped the relevant MFC DLLs. This caused me a few issues (DLL hell!) and I switch
There are some downsides:
We do static linking for our Windows apps, primarily because it allows xcopy deployment, which is just not possible with installing or relying on SxS DLL's in a way which works, since the process and mechanism is not well documented or easily remotable. If you use local DLL's in the install directory it will kinda work, but it's not well supported. The inability to easily do remote installation without going through a MSI on the remote system is the primary reason why we don't use dynamic linking, but (as you pointed out) there are many other benefits to static linking. There are pros and cons to each; hopefully this helps enumerate them.