What does the oil pan spacer do? What is the benefit to it?

It adds an extra quart or so of capacity to the oil system, which in theory helps level out short-term spikes in oil temperature. It also adds more cooling surface area to the bottom of the pan, which will help soak some heat out of the oil in general. It also has a few extra "ports" on it (plugged in my case) for attaching additional oil sensors or turbo oil return lines.

The downside (other than costs and labor) is you're adding the weight of the spacer (it's pretty light, all Al) and the weight of an extra quart of oil to the front of the car.

For lowered cars thats a bad idea haha but still cool you gain more oil capacity and if your doing it for temp might as well just go all out and buy an oil cooler.

Well, that pic is very old. Even back then I had an oil cooler, but now I have the AM Perf baffled pan instead of the spacer.