The working principle of the modern dot-matrix hologram lithography systems is discussed. A novel optical scheme based on the diffraction grating and high performance spatial light modulator——digital micro-mirror device (DMD) is proposed. Based on the optical scheme, a flash-on-fly working mode is realized. A much higher manufacturing efficiency and positioning precision is obtained compared with the traditional step-and-repeat working mode. The main influencing factors of the optical resolution, imaging quality and depth of focus are discussed based on the frequency domain analysis. The implementation of the flash-on-fly exposure mode is illustrated at the end.