Large steam/gas turbines running on the grid have a similar effect. Even without hot gas running through them, they can provide rotational inertia for grid stabilization purposes. This flywheel is basically an extremely heavy version of the same idea, and powered exclusively by the grid itself.
You wont be able to ride out a scenario where there is a long-term lack of generation capacity, but this flywheel could buy the precious seconds/minutes required to spin up peaker plants and other contingencies.