To toggle the inertial damping in a ship, the engineer must be seated in a cockpit and press the Z key this toggle stays on, even after the engineer exits the cockpit. This dampening eventually slows you down to a halt, similar as friction would slow down an unpowered car rolling on a flat street.
When inertia dampers are enabled, if there is no active player input in a certain direction ("foot off the gas pedal"), the thrusters in the exact opposite directions turn on, automatically, and cancel out the velocity in that direction. Inertial dampers simulate the familiar friction behaviour from planet Earth. Additionally, empty space offers no landmarks for us to determine our direction of movement. This is very unintuitive for us human beings who are used to friction slowing us down as soon as we "take the foot off the gas pedal". To brake, we'd have to cancel our inertia by exerting a force in the exact opposite direction. After the smallest movement in a ship or by jetpack, we will continue drifting in that direction until we hit an obstacle. When travelling in the vacuum of zero-g space, nothing naturally slows down our inertia.