In general, lakes tend to follow a seasonal cycle of being well-mixed and forming different layers of water, based on temperature and density. In spring and fall, lake water tends to be well-mixed due to the changes in how much sunlight they absorb during the day and how much heat is able to radiate away at night, and the temperature of the water is fairly uniform from the surface to bottom. In summer and winter, though, the water tends to separate into different layers - in the summer due to the increased heating of the surface layer during the day and less overall heat-loss during the night, and in the winter due to the surface freezing, trapping warmer water below.
Another side effect of this 'stratification' into layers is that the oxygen levels in the water change with depth. The warmer layers of water contain more oxygen, so this is where any fish in the lake stay. In the summer, this is closer to the surface, and in winter it is closer to the bottom. Other chemicals, such as carbon dioxide, methane or hydrogen sulfide, may be dissolved in the lower layers as well.
If the surface of a lake experiences rapid surface cooling in summer, such as when an unusually cool weather system passes over it, the density of the surface layer increases. If the density increases enough that the top layer becomes more dense than the layer below it, the lake experiences an Inversion. The two layers of water quickly switch positions.
This has a dramatic and deadly effect on any fish that live in the lake as they are suddenly surrounded with water that has little or no oxygen in it. Even if some fish managed to be carried along as the layers inverted, they would likely either starve if they stayed in the lower layer of oxygen-rich water, or suffocate if they swam to the surface to feed. The oxygen levels in the top layer will return to normal after an inversion, but only gradually.
Lake Erie is the shallowest of the Great Lakes, with a maximum depth of only 64 metres (compared to Lake Ontario's maximum depth of 244 metres), so it is far more affected by temperature changes than the other Lakes, and this kind of scenario has a greater chance of happening.
One of the complaints of the local residents is the smell, and the rotting fish is only one part of the problem. When the lower layer rises to the surface, it warms and any of the other dissolved gases that might be in it may be released. Lake Erie is already known for having dissolved hydrogen sulfide in it, so that could certainly be responsible for the sewer-smell that some residents have reported.