I think the very simplified idea is that inertia slows down how rapidly the generators slow down respectively speed up in response to load changes, thereby givi

I think the very simplified idea is that inertia slows down how rapidly the generators slow down respectively speed up in response to load changes, thereby giving you a better chance of adjusting power generation to match the new load. If your ratio of inertia to power demand variability is too low, then any sudden change in power demand will lead to your generator rapidly spinning up/slowing down before (in the case of your imagined dam) you have any chance of de-/increasing the water supply to the turbines as required. If it slows down or speeds up too much, then whoops you're hitting the grid frequency limits, power trips, and you've got a blackout. If it spins up too much and too rapidly it might even exceed the mechanical limits of the generator, though normally real-life systems should of course always be designed to be capable of safely handling even a complete load trip, because there's always the possibility of a tree suddenly falling onto a power line or whatnot… With sufficient inertia on the other hand, any mismatch between power generation and power demand now only manifests itself as your generators gradually starting to spin faster/slower, giving you enough time to adjust the water supply valves as required.