We study the dynamics of thermally excited capillary waves (CW) at molecular scales, using molecular dynamics simulations of simple liquid slabs. The analysis is based on the Fourier modes of the liquid surface, constructed via the intrinsic sampling method (Chacón and Tarazona 2003 Phys. Rev. Lett. 91 166103). We obtain the time autocorrelation of the Fourier modes to get the frequency and damping rate Γ_d(q) of each mode, with wavenumber q. Continuum hydrodynamics predicts and thus provides a dynamic measure of the q-dependent surface tension, γ_d(q). The dynamical estimation is much more robust than the structural prediction based on the amplitude of the Fourier mode, γ_s(q). Using the optimal estimation of the intrinsic surface, we obtain quantitative agreement between the structural and dynamic pictures. Quite surprisingly, the hydrodynamic prediction for CW remains valid up to wavelengths of about four molecular diameters. Surface tension hydrodynamics break down at shorter scales, whereby a transition to a molecular diffusion regime is observed.