With reference to the incident mentioned in the OP, it should be noted that the actual blunder that brought about the whole Blitz occurred on August 24, 1940 (a couple weeks prior to the Bombing of London). On that night, Lutwaffe bombers were actually aiming for military targets on the outskirts of London. However, they drifted off course and instead dropped their bombs on the center of London. Winston Churchill believed the attack to be deliberate, so ordered Berlin to be bombed the next evening.
About 40 British bombers attacked Berlin, doing relatively minor damage; however, Germany was stunned. This was the first time bombs had fallen on Berlin, and this after Hermann Göring’s assurance that such could never happen. Similar British attacks occurred on the 28th/29th, and around the 31st.
Hitler was outraged. On September 4th, he declared, “…When the British Air Force drops two or three or four thousand kilograms of bombs, then we will in one night drop 150-, 230-, 300- or 400,000 kilograms. When they declare that they will increase their attacks on our cities, then we will raze their cities to the ground. We will stop the handiwork of those night air pirates, so help us God!”
Which then brings us to the German attack on London the night of September 7th.
As mentioned by London_Calling, the decision to bomb London over the next 57 nights (and other cities as well over the rest of the year) gave the RAF a much-needed respite from the ravages of the Luftwaffe.
So, the actual literal blunder here occurred a couple weeks prior to September 7, 1940. The aftermath, which was primarily fueled by anger, not by any real military planning on either Germany’s or Britain’s parts, resulted in Germany’s ultimate defeat (because it occurred early in the war, the whole episode had much wider-reaching consequences than if it had occurred later).
As a further note, Hitler’s inability to gain air supremacy over England during the Blitz meant that Operation Sealion, the planned invasion of England, could not go forth. So, Hitler instead directed resources toward Operation Barbarossa - the invasion of the USSR.