When you put insulation into an attic, you want to make sure the insulation stays where it is supposed to stay. Sometimes attics have air handlers with trays underneath. Sometimes attics have hatches where you enter the attic space. In both of these cases, if you do not put a dam, your insulation will go in places you do not want it to go.
How would you feel if you opened up your attic hatch and a bunch of insulation fell right on top of you? Probably itchy and annoyed.
How would you feel if your air handler stopped working properly because blown insulation found its way to block the pan or other areas?
Here is a picture that shows damming. You can see a dam built at the hatch where you enter. That way when you move the hatch to enter the attic, insulation does not pummel on top of you. Also behind the dam you can see a small pink line around the air handler. This is also a dam that keeps the insulation away from the air handler, and keeps the insulation directly where it should lay.