SELinux is entirely correct about disallowing dynamic code generation, as it is a major security risk.
Disregarding Just-In-Time compilation, the main legitimate need for dynamic code generation is to support (downward) closures that are ABI-compatible with normal C functions. GCC’s local functions extension of C is one example, and many non-C languages need them badly in their foreign-function interfaces (Haskell is one, Ada I’m told is another).
A closure is a function pointer that refers to a function that is local to another function. That function has access to the local variables of the parent function, and this access is provided by having the caller give the callee a static link (a pointer to the parent function’s stack frame) as a hidden parameter. If the call is direct (that is, not through a function pointer), the caller knows the appropriate static link and can just pass it. The trouble comes with function pointers, as we need some way of including the static link in the function pointer.
The simplest way is to have function pointers be two words long; one of the words contains the classical function pointer (that is, the entry point address), and the other contains the static link. Unfortunately, the prevalent C ABIs, including the SYSV ABI used by GNU/Linux, mandate that function pointers are one word long. The only way I know to work around this is to dynamically generate, when the function pointer is created, a small snippet of code that loads the correct static link to the appropriate place and jumps to the actual code of the function, and use the address of this snippet (usually called a trampoline) as the function pointer. The snippet is generated on the stack or in the heap, and thus requires an executable stack or executable dynamic memory.
It’s time to fix the ABI to allow for proper two-word function pointers.