Okay, so I'm a little lost here...
What exactly does a relay do? I'm wiring up a neon light system for the interior of my Max, and people have suggested that I use a relay instead of a direct wire with a toggle switch. How come? Is it for equal power distribution, or what?

one application is so that it can beef up the power by wiring a signal directly to 12V but having the switched signal a lower voltage

check out my page (link in my sig) in the how-to section there is a thing on relays and basic applications

A relay can be used to isolate to different circuits. It's also better to run 50ma of current through a switch than it is to run 20-30amps of current through a switch.

Also, there tends to be less electrical arcing of using a relay (which also contains the arcing) over a plain switch.

-V

A relay provides a way to use a low-power circuit to control a high-power circuit. This helps keep vehicle weight and production costs low. Example: when you twist the ignition switch to START that causes something like 100 amps to flow through the starter. That 100 amps doesn't flow through the ignition switch; if it did, the switch would melt in one second. The low-power circuit through the ignition switch operates a relay which is built into the starter solenoid. The relay carries the high current.

For general information about relays please refer to the Chilton repair manual (page 6-3) or the Haynes repair manual (page 12-3).

I have not seen this application. Can you give an example?

Power equals Volts times Amps. How does having the switched signal a lower voltage help you beef up the power? It would seem to be just the opposite.

More information please
 

How is arcing measured? How can you tell that there is less arcing with a relay than with a plain switch? I'm not saying you are wrong, just that I don't understand your reasons.

I think arcing is related to the nature of the switched load (inductive load more likely to arc than pure resistive load), to the mechanical design of the switch (slow opening more likely to arc than snap opening), and to the physical environment of the switch contacts (surrounded by an ionizable gas more likely to arc than if surrounded by an inert gas). None of these factors automatically favors a relay over a plain switch.

sorry, I meant to say increase the voltage
I know it can also be used the same way for the current like the example you gave, but I was just trying to simplify it because people tend to think more in terms of volts rather than amps

and yeah, I know P=Vi=dw/dt