It's a mix. While the core concept and some characters have roots in truth, the story was embellished and adapted for the screen to make it more engaging.
The significance could be in raising awareness. By basing it on a true story, it makes the situation more real and relatable. It might make people more empathetic towards those who were in the position of being 'untouchables' in the story.
Often, in such stories, the main character among the 'untouchables' is someone who has experienced extreme discrimination but refuses to accept it any longer. There may be other characters like family members of the 'untouchable' who either support or oppose their fight for equality. And there could be antagonists too, those from the higher castes who are resistant to any change in the existing caste hierarchy.