and there is some logic and truth behind th idea, although the practicalitys are somewhat hazy. from a flow point of view, a hot exhaust works better than a cold one, hotgas moves quicker than cold gas, and an exhaust that stays hot, expells its gases more efficiently than an unwrapped one that being exposed to the air is radiating heat outwards and thus is cooling its exhaust gasses as it is ridden along. so far, so good. in the heightened world of formula1, motogp, wtcc etc where everything is electronically monitored and recorded, theres probably a discernable difference between wrapped and unwrapped, certainly if you can keep the engine bay of a car or faired in engine of a bike cooler, then you can maintain power levels at high load, heat saps power on an engine and if you can spit the heat out of the back rather than have it near the engine radiator, fuel system etc, then thats a benefit. however.
i doubt that there are more than a handful of road riders on the planet who would be able to either tell the difference in performance or even notice if it was there or not, the benefits are at such an extreme end of the performance envelope that nobody will be riding that hard for that long on the road to notice any difference that there may or may not be. so its almost entirely a styling modification. in my case, my pipes are wrapped because im trying to build a completely black bike, to the extent that ive even used shrink wrap to cover the monsterously thick usd forks on my kat cos i didnt want them to be shiny even though theyre expensive hi tech sportsbike forks. so the wrap doubles up as both shine remover as well as leg skin/waterproof preserver! but theres nothing performance improving about it.