No dumb questions.

A "SPILLWAY" is the channel that they use for flowing water out of a lake once it is near full (how near to full depends upon the lake and it's purpose).

Water goes out the spillway, which is located at a level near the top of the dam, but often NOT on the dam structure itself, by gravity and then flows downhill, eventually reaching the old river channel below the dam.

On major dams for the spillway (or sometimes spillwayS) there are GATES that are lifted to allow MORE water to flow out of the lake, and lowered to permit LESS water to flow out of the lake, depending upon how high they want the lake water level to be.

In the case of the Oroville Dam if you go look at it via Google Earth or Bing Maps (click on the satellite option - Bing is better in this case than Google) you can see that the spillway is off to the side and away from the main dam structure. You can also see the control gates that are raised or lowered to control the outflow of the water into the SPILLWAY CHANNEL.

It is the Spillway Channel that has suffered serious damage (if you look at the pictures) AND the damage is severe and undermining the entire spillway itself.

If the undermining would continue, depending upon how they built the control gate structures at the top of the dam, it could undermine the entire channel such that the control gates structures would FAIL ... and then the lake would start to release uncontrollably ... at least until the lake level would fall below the level of channel coming up to the control structures.

Hope that explanation helps.