Originally Posted by TheMuffinMan00

Basically it just creates a good connection.

If you have two pieces of metal that is constatly making a connection then losing you have arcing. This creates heat and will melt the factory plug and wiring. In An HID case this causes flickering and if the connections is not good when you go to turn them on and you have a poor connection for the first 2 seconds the ballast quits trying to turn the bulb on so it won't try again even if power is sent to the ballast as you are driving down the road.

the dielectric grease is actually conductive so when you put it in the plug fittings it "fills in the gap" so the terminals are constantly touching and getting the power they need and doesn't let them arc and create heat.

Originally Posted by Tshock

The terminals are isolated in the plugs right? Otherwise smearing it inside the entire plug would create a commonality between both terminals thus arcing the two?

Originally Posted by TheMuffinMan00

You would have to like fill the whole plug up in order for that to happne. I just put a pretty good dab on each terminal then plugged them together.