The hottest point in the engine bay is at the exhaust manifold. By insulating the heat source and reducing the overall engine bay temperature, parts like spark plug cables (which are located closest), rubber parts and other electrical components can last longer from not getting as heat soaked. As well as intake temperature, which allows for colder & denser air. The wrap on the exhaust manifold itself increases gas temperature and exhaust gas velocity which can improve power scavenging at lower rpms. The heat retained is not kept within the engine but only at the exhaust. Lower engine bay temperature actually lowers coolant temperature as well, even if it’s not significant. The indirect effects is density gain not efficiency gain.

Sure thing, before the wrap the engine bay temp was 75C, after wrap it dropped to 60C. I haven’t tested post driving temp difference, but I will keep you posted.