The recursive B-spline basis functions use the knot vector to determine what their final shapes are. For example, the step functions that form the "base case" for the recursion (the "zeroth" order) are 1 over the interval from one knot value to the next, and 0 everywhere else. For example, a knot vector like [0 0 0 0 1 2 2 2 2] would consist of 8 step functions: 3 of which are 1 from [0,0) and 0 everywhere else, 1 of which are 1 from [0,1) and 0 everywhere else, 1 of which are 1 from [1,2) and 0 everywhere else, and 3 of which are 1 from [2,2) and 0 everywhere else. The next "set" of basis functions (the "1st" order) linearly interpolate between two of the basis functions over the interval, which makes them form triangular functions instead of step-wise functions. The interpolation yields 7 functions instead of 8. The next "set" of functions (the "2nd" order) linearly interpolate from those, yielding 6 functions. The last "set" of basis functions are "3rd" order linearly interpolate from the "2nd" order, yielding 5 basis functions. Since we have 5 basis functions, we need 5 control points to define this cubic B-spline.
Knot insertion just establishes 1 more step function at the "base case". In this example, if we added another knot at 1, we'd get the knot vector [0 0 0 0 1 1 2 2 2 2]. Thus, we'd add another step function that is 1 over the interval [1,1) and 0 everywhere else. Like above, we'd have 9 step functions, 8 "1st order" functions, 7 "2nd order" functions, and 6 "3rd order" functions. Thus, we'd need 6 control points for this cubic B-spline, but those can be determined from the existing 5 control points.
If you don't feel comfortable with the recursive nature of the B-spline functions, you can view a B-spline as a machine that generates Bezier curves of the same degree as the B-spline with a certain degree of continuity between them. In our above example, the cubic B-spline with knot vector [0 0 0 0 1 2 2 2 2] is really just 2 cubic Bezier curves with C2 continuity between them. The control points of those Bezier curves can be found by inserting multiple knots (Cox-de Boor algorithm) until we reach the knot vector [0 0 0 0 1 1 1 2 2 2 2].
If you're interested, Dr. Lyle Ramshaw's "polar form" notation helps show the effect the knot vector has on the underlying B-spline.