IAT stands for Intake Air Temperature. It is a simple thermistor that changes its resistance according to the temperature it is at. The idea beind this modification, is that by changing the resistance to that of a cooler interpreted reading, you will get more fuel. While it is true that you will dump more fuel...its false that this is a good idea. Running rich is bad for performance, so you are just wasting your time with adding more fuel in this fashion.
The stock computer already compensates fuel as it is, so trying to trick it into giving you more fuel is completely worthless. If you dump too much fuel, via switching to a colder resistance on the IAT while driving, you may even notice a puff of black smoke out the exhaust. Then, the O2 sensor will detect the overly rich mixture, and reduce the injector pulse width. This totally defeats the purpose or the IAT mod.