It works similarily to thermal paste or grease - it's a compound that connects the chip and the radiator and improves heat transfer, the difference being that it affixes the radiator permanently - like glue. It's often used instead of thermal paste or grease on integrated circuitry so that the radiator is set in place without any screws etc.

It's literally what you think it is - thermal glue.

This post has been edited by Foxi4, Sun, January 13th, 2013 at 15:00