Is Microsoft Dynamics primarily a CRM or an ERP?

It is a basic ERP system, for small size businesses only. Not the best performance though.

Microsoft Dynamics 365 is the cloud evolution of their on-premises business solutions product suite, formally known as Dynamics AX, CRM, GP etc., and built on their cloud-native Power Platform. Similarly, Microsoft 365 is their cloud evolution of the Microsoft Office product suite. Each element is now straightforwardly branded, for example, ERP: Dynamics 365 for Finance, Dynamics 365 for Human Resources etc, CRM: Dynamics 365 for Sales, Dynamics 365 for Customer Services etc.

So to answer your question directly: No, it is a superposition of both.

That’s like asking if Microsoft Office is a word processor or a spreadsheet.

Microsoft Dynamics offers both an ERP and a CRM but they are different products in the portfolio. Although they have their own name (eg Dynamics CRM) many people simply refer to the one they use as “Dynamics” and hence likely the reason for your question.

It isn't fulfill the complete needs of CRM so it's rather an ERP in my opinion.

I had the same question while undergoing an enterprise software selection process in 2018.  “Dynamics” is a name that covers many different software types. The short answer is Dynamics is both an ERP and a CRM. They are licensed separately and have different code bases but they integrate well.  ERP is commonly referred to as D365 finance and operations, also D365 supply chain management. While CRM is commonly referred to as Dynamics CRM. The long answer can be found here: https://www.dqsconsulting.com/wp-content/uploads/2022/08/Microsoft-Dynamics-365-Ecosystem-map-July-2022-pdf.pdf
Microsoft does not make the product stack and licensing “easy”. It’s best to get a partner to help digest this for you based on your company needs.