For me to understand Instagram stories, it's important to kinda understand the Instagram culture. Normal posts (not stories) are pretty "high-effort" (in terms of shooting and editing) and are posted not so often, maybe every two days at max for your average teen. This left a gap for short-lived stuff (I'm currently eating in this 5* restaurant, I'm currently hiking, I'm on this "cool" party etc.) you wanted to share to a large group of your "friends" (so DM like whatsapp is not a real option because it feels attention-whoring to write it to everyone).
This was mostly filled by Snapchat stories, where you could share exactly that without having to fear to spam people because it's time-limited, everyone does it and it's a very casual format. This feature was basically copied by instagram and is a success for the same reasons, expect nobody uses snapchat stories anymore.
Source: I have young siblings and I kinda use that stuff as well, although not that much.