In this article, an analytical theory to describe the nonlinear dynamic response characteristics of a typical SPP waveguide-cavity structure formed by a Kerr-type standing-wave cavity side-coupling to a metal-insulator-metal (MIM) waveguide is proposed by combining the temporal coupled mode theory and the Kerr nonlinearity. With the analytical theory, the optical bistability with the hysteresis behavior is successfully predicted, and the optical bistability evolutions and its dynamic physical mechanism are also phenomenologically analyzed. Moreover, the influence of the quality factors Q₀ and Q₁ on the first-turnning point (FTP) power of optical bistability and the bistable region width, the approaches to decrease the FTP power and to broaden the bistable region are also discussed in detail with our analytical theory. This work can help us understand the physical mechanism of the nonlinear dynamical response at nanoscale, and may be useful to design nonlinear nanophotonic systems for applications in ultra-compact all-optical devices and storages.