Dumb question but..
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basically a cutout opens up your exhaust before the muffler, and reduces your backpressure. This normally leads to more horsepower, generally 5-10 and maybe even more depending on how restrictive your exhaust is. An electric cutout is hooked up to a switch in your car so that you can flip the switch and open your cutout, instead of having to crawl under the car and unbolt it.