We report a comprehensive experimental study and detailed model analysis of the terahertz dielectric response and density kinetics of excitons and unbound electron-hole pairs in GaAs quantum wells. A compact expression is given, in absolute units, for the complex-valued terahertz dielectric function of intra-excitonic transitions between the 1s and higher-energy exciton and continuum levels. It closely describes the terahertz spectra of resonantly generated excitons. Exciton ionization and formation are further explored, where the terahertz response exhibits both intra-excitonic and Drude features. Utilizing a two-component dielectric function, we derive the underlying exciton and unbound pair densities. In the ionized state, excellent agreement is found with the Saha thermodynamic equilibrium, which provides experimental verification of the two-component analysis and density scaling. During exciton formation, in turn, the pair kinetics is quantitatively described by a Saha equilibrium that follows the carrier cooling dynamics. The terahertz-derived kinetics is, moreover, consistent with time-resolved luminescence measured for comparison. Our study establishes a basis for tracking pair densities via transient terahertz spectroscopy of photoexcited quasi-two-dimensional electron-hole gases.