I am not overly familiar with the practice as I do not show and it is unneeded for trail riding but the basic idea is to trim down the horse's neck and throatlatch to make it more uniform with the rest of their body. I believe neoprene "neck sweats" are used (big pieces of neoprene designed to cover the whole neck or one specific part). Mainly, it is used for appearance purposes only in halter and in-hand shows, I think. I think it works by causing the area under neoprene to get hot and sweat causing the loss of fat and water weight................................I think. LOL
SMROBS has it basically right. Many people layer multiple sweats on the neck and there is even a cream that you can put under them to speed up the process. They are mostly used on halter horses. They do help keep the fat off of a neck but they do not fix a bad neck.