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I've seen performance exhaust pipes on sale for cars and motorcycles, and my questions are these:

  1. What does it do? (better performance [and how so?]? better mileage? cooler sounds?) Is/how is it different for different engines? (car, motorcycle)
  2. How does it do it? I'm most curious about my 4-stroke carbureted 125cc scooter, but I expect it does basically the same thing across engine sizes (or does it?).
  3. Why do I want it? If I want to race, if I want to save money, etc? This should follow from #1, but I'm still curious about what the classic get-a-performance-pipe-if scenarios are.
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What does it do? (better performance [and how so?]? better mileage? cooler sounds?)

It depends. One of the goals of a performance exhaust is usually to create a tuned system:

A tuned exhaust system is an exhaust system for an internal combustion engine which improves its efficiency by using precise geometry to reflect the pressure waves from the exhaust valve or port back to the valve or port at a particular time in the cycle.

Note that the focus on this sort of optimization is the flow of exhaust gas, not the elimination of noise. This doesn't mean that a well-designed system can't also be street legal but there's an excellent chance that, for common street vehicles, an exhaust system replacement will be louder than the stock equipment.

Why do I want it? If I want to race, if I want to save money, etc?

If you're not sure, there's a good chance that you don't want a new exhaust.

This should follow from #1, but I'm still curious about what the classic get-a-performance-pipe-if scenarios are.

To be honest, the most common story that I hear from people getting louder pipes is "spent money, was louder, went slower."

Here are some situations that have applied to me over the years:

  1. Muffler on normally aspirated car rusted out. Sourced a replacement cat-back system that claimed single digit horsepower increases based on the manufacturing company's racing efforts. The system used stainless steel so it was also less likely to rust and significantly lighter. In the end, I paid hundreds of dollars for a few horsepower and more noise (admittedly, it sounded really cool).

  2. Exhaust header on normally aspirated car lost an internal weld, turning the engine into Buzzy the Hummingbird. Replaced header with stainless steel (see above).

  3. Muffler on turbo car got really rusty. Replaced with stainless steel with better flow. Very modest boost in power from increased exhaust flow (more important in a turbo car).

  4. Replaced turbo up-pipe (the primary path of exhaust gas to the turbo's turbine). Significant increase in performance.

So, some basic guidelines drawn from my experience:

  1. Replacing anything near the muffler is likely to increase noise significantly with only modest increases in performance.

  2. Reducing weight is always a good idea.

  3. Reducing rust risk is great, too.

  4. A change to a forced-induction engine's exhaust components have the greatest effect near the "forcing" part of the system (e.g., the turbo). Things aren't so obvious for a normally aspirated engine.

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Sometimes aftermarket systems are not that much more expensive. Stock muffler on my VW rusted out, so I replaced it with the nice TechTronic cat-back with better geometry and Borla muffler, and it cost me only around $30—50 over the stock system. It was not even loud, just a nice low rumble, and a touch of peppiness added. –  theUg Feb 12 '13 at 6:40
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Performance exhaust pipes increase power by getting the exhaust gas out of the engine faster. It does this by eliminating the restiction by using larger pipes or less sound absorbing/reflecting material. An analogy is the aerator on the faucet it slows down the output or flow out of the pipe similar to a muffler. Gas mileage is improved by getting more of the burnt fuel out of the combustion chamber prior to the incoming fuel mixture entering the chamber. The resulting increase in power means the throttle has to be opened less to get the same acceleration. Less throttle=more MPG. This only works if self restraint is used when applying the throttle. My opinion has always been to add a performance enhancer only when the original part needs replacement. Unless you are racing or it will increase the reliability of the vehicle you will not likely see enough savings to offset the cost. If you replace a good system with a $700 performance system it will take a long time to recoup $700 worth of fuel. But if the stock system needed replacement at a cost of $350 you would only have to recoup $350 in fuel saving to pay for the performance system.

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And also be aware that in many countries moving to a performance exhaust which is louder than the stock exhaust can bring legal problems, eg in the UK you may be fined, so best take that possible cost into account too! –  Rory Alsop Aug 7 '12 at 10:41
    
I disagree with the MPG argument. Assuming normal driving, MORE throttle producing a given amount of output power tends to result in better MPG as pumping losses are reduced. Less throttle results in higher losses at low output levels. Remember, you're not going to get any more fuel than is needed for the air making it into the system, so there's no impact on fuel economy from that side of the equation. The only impact is on the other side... –  Brian Knoblauch Aug 7 '12 at 13:07
    
@BrianKnoblauch, I think your comment conflates a few points: it sounds like you're arguing that a car will have highest MPG at full-throttle. The actual MPG number is going to depend on many more variables than just the throttle position (e.g., current speed => drag). –  Bob Cross Aug 11 '12 at 22:45
    
What I mean is more throttle for the same output power at the same RPMs, as long as you don't enter open loop, is the most efficient. –  Brian Knoblauch Aug 13 '12 at 12:41
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