The purpose of insulation is to lower the heating and cooling costs for the house by limiting heat transfer through the walls and the ceiling. The insulation process starts by installing foam channels in the eaves:
These channels guarantee that air will be able to flow from the soffit vents to the ridge vents. Without these channels, insulation tends to expand into the eaves and block the soffit vents. This house uses standard fiberglass insulation throughout:
Notice that over the insulation is a thin plastic vapor barrier. The idea behind the vapor barrier is to keep moisture that develops inside the house inside. Without the barrier, here is what happens inside the wall in winter: Warm, moist air moves through the drywall and into the insulated wall cavity; at some point inside the cavity it becomes cold enough for the moisture to condense, soaking the insulation. The vapor barrier prevents this process. In older homes, the siding and sheathing were so loose that air easily migrated out before the moisture condensed, but that is no longer the case so the barrier is essential.