Octrees are easy to update dynamically. Typically the tree is refined based on a per leaf upper/lower population count:
When a new item is inserted, it is pushed onto the item list for the enclosing leaf node. If the upper population count is exceeded, the leaf is refined.
When an existing item is erased, it is removed from the item list for the enclosing leaf node. If the lower population count is reached, the leaf siblings are scanned. If all siblings are leaf nodes and their cummulative item count is less than the upper population count the set of siblings are deleted and the items pushed onto the parent.
Both operations are local, traversing only the height of the tree, which is O(log(n))
for well distributed point sets.
KD-trees, on the other hand, are not easy to update dynamically, since their structure is based on the distribution of the full point set.
There are also a number of other spatial data structures that support dynamic updates - R-trees, Delaunay triangulations to name a few, but it's not clear that they'd offer better performance than an Octree. I'm not aware of any spatial structure that supports better than O(log(n))
dynamic queries.
Hope this helps.