From Scientific American comes this gaily-animated video of Scientific American MIND editor Ingrid Wickelgren explaining why our inner ear makes us dizzy.
I always liked the explanation offered by the immortal Douglas Adams (not necessarily true, but sounds neat, dunnit?):
"I've heard an idea proposed, I've no idea how seriously, to account for the sensation of vertigo. It's an idea that I instinctively like and it goes like this. The dizzy sensation we experience when standing in high places is not simply a fear of falling. It's often the case that the only thing likely to make us fall is the actual dizziness itself, so it is, at best, an extremely irrational, even self-fulfilling fear. However, in the distant past of our evolutionary journey toward our current state, we lived in trees. We leapt from tree to tree. There are even those who speculate that we may have something birdlike in our ancestral line. In which case, there may be some part of our mind that, when confronted with a void, expects to be able to leap out into it and even urges us to do so. So what you end up with is a conflict between a primitive, atavistic part of your mind which is saying 'Jump!' and the more modern, rational part of your mind which is saying, 'For Christ's sake, don't!' In fact, vertigo is explained by some not as the fear of falling, but as the temptation to jump!"