none of you actually knows how liquidity works

Please explain how liquidity works

3000 $anon for the best explainer

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I tried to put it in a simple manner here:

 Liquidity is the ease with which you can purchase or sell an item (such as a stock, asset, or currency) without impacting its value.

Consider it as a booth in a market.

High liquidity means there are numerous buyers and sellers participating in trades, allowing for quick transactions without affecting the market price. Similar to a bustling marketplace teeming with numerous shoppers.

Limited liquidity: A small number of buyers and sellers are participating in trades, making it difficult to buy or sell assets without impacting the market price. Similar to a tranquil market with sparse clientele.