The "cleverer" approach (using dynamic programming) is basically this:
For each substring of the original string, figure out all possible values it can create. (e.g. in your first example "12" can become either 1+2=3 or 1*2=2)
There may be a lot of different combinations, but many of them will be duplicates. (Also, you should ignore all combinations that are greater than the target).
Thus, when you add a "+" or a "*", you can envision it as combining two substrings of the string. (and since you have the possible values for each substring, you can see if such a combination is possible)
These values can be generated similarly: try splitting the substring in all possible ways, and combine the different values in each half of the substring.
The total number of "states", then, is something like |S|^2 * target - for your example case, it's worse than the brute-force method. But if you had a string of length 1000 and a target of say 5000, then the problem would be solvable with dynamic programming.