A direct-current (DC) power distribution system (PDS) enjoys the benefits of flexibility and efficiency. However, increasing stability issues occur due to the interaction among feedback-controlled converters in PDS. For ensuring stability, various impedance-based method is discussed by scholars. Unlike the traditional analysis method based on minor-loop-gain (MLG), Passivity-Based Stability Criteria (PBSC) is a novel bus-impedance-based method. Although PBSC is a promising measure of stability analysis for the distribution system, the difficulty of stability margin calculation and dynamic characteristic analysis limits its application. Therefore, the relative stability margin (RSM) is proposed to assess the damping levels. Based on RSM, the dynamic performance optimization algorithm (DPOA) is presented to optimize the proposed MMC impedance reshaping (MIR) control. Compared with the past stability analysis, dynamic behaviour is considered in this paper when stability improvement is implemented. By means of the MIR and DPOA, the stability and dynamic performance of the distribution system are enhanced. Simulation results confirm the validity of the proposed viewpoints and method.