Question: WHAT IS THIS?? (See pic)

Is it necessary, because i personally don't like the look of it. It's only running at 4 psi for normal street driving, what kinds of psi would you recommend having the heat shield on for, all?, or only higher psi's?
 
Turbos are going to dump alot of heat into your engine bay no matter what boost you run, although after a healthy WOT run they can be glowing orange. The heat shielding most likely isnt mandatory, but it will reduce boost lag and keep alot of underhood items from cooking, like paint, wires, and electronics. With the volume of air moving through a turbo and the heat generated by simply compressing air, I wouldnt worry about heat migrating from the turbine to the compressor.