Negative damping arising from the mismatch between the port impedance characteristics of power electronic converters and the DC line impedance in DC power grids can severely compromise DC system stability. The classical impedance-based method has inherent limitations: when its underlying assumptions fail or when pole-zero cancellation occurs, key dynamic modes may be omitted, leading to incorrect stability assessments. To address this issue, the intrinsic mechanisms behind the failure of the classical assumptions is first analyzed, followed by an investigation into the origin and typical scenarios of pole-zero cancellation. An improved nodal impedance simplification method based on a generalized admittance matrix is then proposed. This method overcomes the inherent limitations of the classical impedance approach in DC grid stability analysis and resolves the computational challenges in nodal impedance extraction caused by the dimensionality growth in admittance/impedance matrix methods, thereby enhancing their applicability to large-scale systems. Finally, two-terminal and three-terminal VSC-HVDC system models are constructed respectively in PSCAD/EMTDC to verify the correctness of the theoretical analysis and the effectiveness of the improved method presented.