React hooks 'state' variables are scoped to a single function. They are not arbitrary variables, but represent inputs to the program. The mental model is a function that produces the same output given the same inputs. Think of a dropdown, where the associated state variable D my have values a, b or c, depending on what the user chooses. The render function simply does not care how the value of D was set, and renders the exact same jsx given a specific D value: jsxa for a, jsxb for b and jsxc for c. That is as pure as it gets. Furthermore, the dropdown state variable D never represents the intermediate computation of some other component[s], and it's never changed by other components arbitrarily based only on the variable name.

The use of "dynamic scoping" to describe React Hooks state is unnecessarily imprecise, implying that a fairly well designed system is a specific kind of mess. Please don't engage in FUD.

Tip: Never call setFoo functions from render code. Only call setFoo from event code.