Considerable progress has been made in developing a theoretical framework for modeling slug test responses in formations with high hydraulic conductivity K. However, several questions of practical significance remain unresolved. Given the rapid and often oscillatory nature of test responses, the traditional hydrostatic relationship between the water level and the transducer‐measured head in the water column may not be appropriate. A general dynamic interpretation is proposed that describes the relationship between water level response and transducer‐measured head. This theory is utilized to develop a procedure for transforming model‐generated water level responses to transducer readings. The magnitude of the difference between the actual water level position and the apparent position based on the transducer measurement is a function of the acceleration and velocity of the water column, test geometry, and depth of the transducer. The dynamic approach explains the entire slug test response, including the often‐noted discrepancy between the actual initial water level displacement and that measured by a transducer in the water column. Failure to use this approach can lead to a significant underestimation of K when the transducer is a considerable distance below the static water level. Previous investigators have noted a dependence of test responses on the magnitude of the initial water level displacement and have developed various approximate methods for analyzing such data. These methods are re‐examined and their limitations clarified. Practical field guidelines are proposed on the basis of findings of this work. The soundness of the dynamic approach is demonstrated through a comparison of K profiles from a series of multilevel slug tests with those from dipole‐flow tests performed in the same wells.