Whether it's thick blankets of fiberglass batts, meringue like mounds of sprayfoam (Tom's favorite), or layers of seaweed (discovered under the floors of the first TOH project), all insulation works the same way: by trapping tiny air pockets that slow the movement of heat out of a house in winter and into a house in summer. Its effectiveness at resisting this movement is called its R-value; the higher the value, the lower your energy bills. 

But to achieve its rated R-value, insulation must be installed correctly. In fact, a bad job can actually make matters worse. Read more here.