What is the expected behaviour of Dynamic Batching?

We know Dynamic Batching is intended to unify multiple models into a single Draw Call, if they a) Share a material, b) Each use <300 vertices.

Are there any undocumented limitations, tips or usage guidelines?

Renaldas taked about batching in detail in iPhone Optimization talk at Unite 2009. Unite Presentations page on Unity website should have the recording + slides soon(ish).

Yes Dynamic Batching is great. But it’s not magic. It creates one model from multiple. If you have too many models it could be worse than without dynamic batching.
Hope you find the way to calibrate it.