The flu (and news of the flu) spread much slower than COVID. The decision to keep dorms open was most likely made with limited information. To put this into perspective: many Harvard/MIT students didn't realize there was a deadly flu until they arrived on campus and were told to turn around. [0] Those students then had to alert any other students or travelers they met on their way home to also turn around. This propagation took a few weeks.

But lets entertain whether or not this was a good decision(it wasn't):

* Impromptu hospitals had to be arranged for at the A.T.O., Delt, Fiji and Theta Chi fraternities within weeks of the flu hitting Palo Alto. [1]

* Administration banned social gathering and unwarranted travel. Students were quarantined on campus and could not leave. Masks were compulsory everywhere on campus. Anyone not complying with the masks guidelines received a fine (this is somewhat less harsh than the police beatings in Boston/Cambridge).

* By October, it was considered a success that only around ten students died.

Meanwhile, not a singular undergraduate from MIT died on campus, and they continued their studies with an accelerated semester the following year. [2][3]

--

Notes:

[0] I've edited this from "flu" to "deadly flu." Initially, a few colleges (MIT included) opted for delaying the semester a few weeks. This led students to believe the flu was not too serious, resulting in students being caught mid-travels before being told how deadly the flu really was. This led to a lot of confusion and the MIT President apologized sometime that Winter in a letter (and later in The Corporation's yearly report).

--

Sources:

[1] https://news.stanford.edu/thedish/2018/03/15/100-years-ago-t...

[2] https://news.mit.edu/2020/3-questions-archivist-nora-murphy-...

[3] MIT Archives & Distinctive Collections