"First we must dispel a common misconception: "Water Wetter" is not designed to lower your car's bulk coolant temperature. So if you put it in your radiator hoping to see lower operational coolant temp's, then you will probably be disappointed.
"Water Wetter" is designed to reduce hot spots in your cylinder head. It does this by reducing the build-up of water vapor in any superheated areas. The bad thing about having hot spots in your cylinder head (read combustion chamber) is that they can promote pre-ignition - definitely a bad thing. This harks back to Smokey Yunick's theory of "soft combustion chambers". Any sharp edges in your combustion chamber (around valve seats for example) may tend to get very hot (even red hot) during operation. These areas of the combustion chamber can then form local hot spots in the cooling passages. Thus, even though your bulk coolant temperature is well below its boiling point (i.e. your gauge reads just fine), there may be localized boiling in some regions of the coolant tract.
This localized boiling can cause a layer of water vapor to form over the hot spot. This vapor forms an insulative blanket and prevents heat from leaving this area, thus making the hot spot even worse. But reducing the surface tension of the water makes it easier for vapor bubbles to leave the surface of the cylinder head and allows the bubbles to convect heat away from the area. Something that changes the surface tension of a liquid is called a "surfactant". It does not take very much surfactant to significantly change the surface tension of water. Hence, you do not need to add very much "Water Wetter" in order for it to do its job.
An additional benefit of using "Water Wetter" (in conjunction with 100% water) in you cooling system is that water has an extremely high heat capacity. Thus a gallon of 100% water can carry more heat away from you engine than an equivalent gallon of 50/50 water and coolant. Water also has a high thermal conductivity which increases the convection of heat away from the coolant passage walls and into the free stream of the liquid flowing through the passages"