An intercooler is a heat exchanger positioned between
the turbo and the intake manifold. It's sole purpose
is to get heat out of the intake charge that the
turbo put into the charge whilst compressing it.
Removing heat from the intake charge has two huge
areas of merit.
First, the reduction of temperature makes the intake
charge denser. The increase in density is proportional
to the change in temperature. Denser intake charges
make more power.
Second, but no less important, is the terrific
benefit to the combustion process brought about
by reduced temperatures in the intake charge. These
two areas of merit are the reason a properly designed
intercooler can increase the power and/or margin
of safety of the turbo charged engine.