I'm not an electrical engineer, but here's how I understand it:
The voltage on Vcc isn't as constant as one might initially think. It can vary over short periods of time as the load (amount of power drawn by other chips) varies, and occasionally, adjacent signals can "bleed" onto Vcc.
Think of a capacitor as like a balloon that fills up with static charge Q when there's a voltage across it. As the voltage v across the cap changes over time t, it releases some of its charge as current i to even out the voltage change: i = C*dv/dt, where C is the capacitance. A cap between ground and Vcc keeps Vcc from changing rapidly in response to load and noise elsewhere in the circuit.
On Wikipedia, see Reservoir capacitor and Decoupling capacitor.
Fried the PPU?
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