When you inherit a property, you pay the estate tax - actually the estate does if the assets are over the current $13.61 million basis.
When you sell an inherited property, you pay capital gains. Capital gains involves figuring the basis for the investment.
A step-up basis means that if my grandfather paid $25K for a property, and I inherited it at $3 million, then sold it for $3 million. I have $0 capital gains.
Without the step-up basis, my basis would be the $25K plus additional upgrades, but leaving me with a capital gains of roughly $2.9 million plus or so.
If I don't sell it. I don't have a capital gains to pay, and so the step-up value has no effect.
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