I'm sure this response will make Grammarians scream but in every day real life situations... not much difference between the two. To me the meanings of: 'I swam' VS 'I was swimming' is the same. Either way... I was in a pool at some point in the past. I will attempt to explain the subtle difference below:
'Nadamos' = 'We swam' is simple past tense which denotes that an event happened in the past. Nothing else... it just happened at some point in the past.
'estábamos nadando' = 'We were swimming' is something called past progressive (or past continuous). It still defines something that happened in the past but makes that action a continuous action. In other words the action was uninterrupted for a period of time in the past. It sort of gives a time frame or reference to the event that simple past lacks.
(bracing for all the down votes and responses from the Grammarians now...)