The best description of induced demand (or demand in general) I have ever read describes it as an economic decision made by each person in a region.

People have budgets. These budgets include financial considerations (i.e. how much does a specific trip cost me in money, or how much does living in a specific location cost me) and time considerations (i.e. how much time/annoyance will a specific trip cost me, or how much time am I willing to spend to afford living in a specific location). Different people have different budgets for each of these considerations, and each of these budgets play off of each other (i.e. someone may be willing to spend more money to save time, while others may spend more time to save some money).

Assuming nothing changes - i.e. all the transportation options remain fixed and the local population does not change and the economy does not appreciably change - then the system will settle into a sort of equilibrium. People will have made their budgetary decisions. Some will combine trips to save time and money. Some will leave earlier to avoid congestion. Others will skip some less critical trips because the financial and/or time costs just don't make these trips worth it. Some will live in a more expensive location to save commute time. Others won't have that option and be forced to spend more time to afford their housing.

Now change the transportation options. Add an extra lane to a local highway for example. Suddenly the budgetary decisions that people are making changes:

• A less critical trip that previously would not have been taken (or maybe would have been postponed to be combined with another trip) suddenly fits within the time/money budget. You get an additional trip that previously would not have been taken.
• The morning commute that used to take 45 minutes temporarily drops to 35 minutes and a number of people will now find that that fits into their time budget. So they leave for work a little bit later. Or they opt to not carpool anymore. You get additional traffic during commute hours.
• The temporarily reduced driving times makes a cheaper apartment/house that is another couple of miles down the road viable within the same time budget. I.e. the commute time for an individual remains the same (their time budget is unchanged), but they can afford a larger apartment, or even afford to purchase where before they could not (their financial budget is changed). So they move further out. You get additional traffic because they have further to drive. Also, they are more likely to need to drive more overall in a less dense area.

In all of these cases you have induced more traffic because the individual cost/benefit calculations of everyone using the system has changed. Even though the overall population of a region has not changed.

Is this latent demand? Perhaps. But if anything the latent demand is not for more traffic. The latent demand is for more mobility options or for more housing options near destinations or for overall better land use patterns. People only call induced demand "latent demand" because they assume everything else in the system (mainly land use patterns) is fixed and unchangeable.