Home insulation can take many forms, but it basically works the same way - it captures air and holds it still so that it helps inhibit the natural transfer of thermal energy from high to low, the direction that heat always wants to go. The more air holds still, the less likely it is that heat will be transferred efficiently.
Still air is often referred to as "dead air" because it isn't moving. Air that isn't moving has a difficult time transferring energy. Think of the radiator on your car. The fan behind the radiator moves air through it to help transfer heat from the engine to the air. If the fan were to stop, the transfer of energy would be greatly reduced, and the engine would overheat.
The same principle applies to fiberglass bats, rolled or blown-in insulation in your attic. If you have a thick enough layer, it effectively captures dead air within itself and that inhibits the transfer of energy to and from your home.
A jacket provides dead air between the wearer and the lining, and it also provides even more effective dead air between the liner and the outer layer. Effective insulation includes materials like felt, poly fiber-fill, wool or other fibrous materials that have lots of air spaces between the fibers. The fibers keep the air from moving, and that provides resistance to thermal energy transfer.
With this in mind, you can see how important it is to seal up your house. Less air movement enhances the effectiveness of your home insulation.
Clair Schwan is an expert in frugal living, and has many ways to save energy. He believes the single most important passive energy conservation measure we can employ is to provide our homes with more attic insulation.