The texture can not be found.
DynDOLOD tries to not generate LOD for or with missing textures to avoid issues. This means, LOD might be missing for objects that otherwise could have had LOD.
In the worst case scenario missing textures cause CTD. In the best case the game defaults to the typical purple default texture that indicates the texture is missing.
The log tries to only report missing textures in case they might actually be used in the game. For example, it seems quite normal for mods and also for the vanilla game to contain orphaned records. If such an orphaned record requires a missing asset, it should be not reported.
This can happen in case not all required *.BSA files are not loaded for whatever reason. The log prints a list of every *.BSA file that is loaded. Check that none of the required *.BSA files are missing by comparing the log messages to the load order.
This can happen if a mod is installed that requires the textures from another mod that is not installed. Verify the requirements of the related plugins or mods.
This can happen if a mod is updated and the TexGen configuration was made for an older version or vice versa. Update the mod. Always use the latest DynDOLOD/TexGen version. Use the official DynDOLOD support forum for help and qualified advice.
This can happen if not all required textures where included in the download archive of a mod or there are typos in the *.NIF files.
Generate object LOD textures and tree/grass LOD billboards with TexGen first to generate all required LOD billboards and object LOD textures for the load order. If the missing texture filename ends in *_trunk_[1|2].dds, make sure to check the Rendered checkbox in the TexGen Tree/Grass LOD Billboards options.
In case a texture is not found while running TexGen, it will be substituted with the default diffuse (full red color) for *.DDS or the default normal map (flat surface) for *_n.DDS automatically. The first should be very obvious in case the generated object LOD texture or LOD billboard is used in the game and typically needs to be fixed. The flat normal map substitute means the surface of the object will be flat, which might not be a very visible problem if at all.
If it has been verified that a missing texture is not required, try to remove or update the unused record, entry or model so the non existing filename is not being referenced to clean up the mod or plugin from generating unnecessary log messages.
In case a required texture is really missing from a mod archive or installation, notify the mod author.
Check if the mod DynDOLOD TexGen Fixes (Summerset Isle-Rigmor-Project Aho-Gray Cowl-Beyond Reach) fixes file not found textures for the mentioned plugin/mod.