I'm going to try to make this as short and to the point as possible. It's just me thinking out loud a bit, drawing on the massive amount of peer review research I've read on the topic -- a mere fraction of which I've formally blogged on -- but without any references so that I can just get this out there. No ... this is not some manifesto grand theory on diabetes and all that to be analyzed and picked apart as if I'm presenting this as fact. It's just a plausible analogy for what I think happens when metabolic mahem turns to "diabetes". I'm also going to simplify things and deal with only glucose and fatty acids here.
Our ß-cells metabolize glucose and fatty acids the same way our other cells like muscle cells do for energy. Essentially this metabolism is part of the mechanism by which the ß-cell senses the circulating levels of these energy substrates. This metabolism also produces ROS -- reactive oxidative species. While ROS are often seen as detrimental, due to the fact that they are in inappropriate amounts, the ROS molecules also play key signaling roles. The metabolism of glucose and fatty acids produce a different redox state and ROS so this is roughly how the cells can tell what's being metabolized, etc.
Insulin is secreted by ß-cells in response to both glucose and fatty acids. In response to a sharp rise in glucose (e.g. eating a carby meal), an insulin "spike" is mounted -- an acute secretion of insulin -- the GSIS = glucose stimulated insulin secretion. However we always have some basal level of circulating insulin (and it isn't as simple as some constant slow secretion) that is regulated to a significant degree by the levels of circulating free fatty acids, NEFA. The production of insulin can be simplified to modification of a precursor protein (proinsulin) to form insulin granules packaged in vesicles which eventually are released into circulation by the process of exocytosis. There is some evidence that high demand for basal insulin depletes the proinsulin stores so that the cell can no longer produce the larger amounts of insulin required for an appropriate GSIS.