The lunge is a great exercise. It hits the quads, hamstrings, and glutes. Every variation can be done with dumbbells, a barbell on the back, or a barbell held in the front squat position.
The length of your stride (the space between your feet) will determine which muscles are targeted most. A short stride hits the quads more. A longer stride hits the hamstrings and glutes more.
The biggest mistake with the lunge is bending forward at the waist. This is caused by inactive glutes and can injure the lower back. Keep the torso upright and don't "fling" yourself back into the starting position.
These tips can apply to most lunge variations: walking lunge, static lunge (where your feet stay in the same place as you move up and down), dynamic lunge, or the backward lunge.