From the plugin changelog
New in Version 4.0 (2014-03-30):
No static files anymore, sitemap is created on the fly!
Sitemap is split-up into sub-sitemaps by month, allowing up to 50.000 posts per month! More information
Support for custom post types and custom taxonomis!
100% Multisite compatible, including by-blog and network activation.
Reduced server resource usage due to less content per request.
New API allows other plugins to add their own, separate sitemaps.
Note: PHP 5.1 and WordPress 3.3 is required! The plugin will not work with lower versions!
Note: This version will try to rename your old sitemap files to *-old.xml. If that doesn’t work, please delete them manually since no static files are needed anymore!