Why does this part exist?

On the Gen2 and Gen3 engines, the factory bypass valve lives in a separate coolant circuit that runs between the head and the block. The ECU manages it, targeting a block coolant temperature roughly 15°C above what the main thermostat holds (and that thermostat is itself partly under ECU authority). The point of running the block warmer is to keep its oil a touch less viscous, which nets a small efficiency bump but trades away a bit of lubrication margin. Beyond being redundant, this valve has a bad reputation. Coolant weeps past the shaft over time, and the body tends to fracture right where that flimsy coolant barb joins it. Lose the vacuum diaphragm and the valve stops responding to commands entirely, which opens the door to overheating. The factory unit is capable of shutting nearly all the way, which parks the coolant in the block circuit with no flow. You'll see that behavior mostly when ambient temps are low. Once the engine warms and when it's working hard, the valve sits wide open.

The factory bypass valve is exactly what you do not want buried in a coolant system

A fussy little plastic valve full of moving parts, sitting there getting cooked every time the engine comes up to temp.

VW could have made it simple. Instead, they gave it brittle plastic, seals, internal bits, and just enough complexity to make failure more annoying than it needed to be. Heat cycles do what heat cycles do. The plastic swells, cracks, warps, or starts weeping coolant from some miserable spot you can barely see, let alone reach.

This part gets rid of that whole circus.

Machined from solid 6061-T6 billet aluminum, this sealed flange replaces the failure-prone bypass valve with a simple, solid, properly sealed solution. No moving parts. No plastic body waiting to split. No coolant trail. No mystery smell. No crawling around later wondering which over-engineered plastic piece decided today was its last day.

It just closes the loop and does the job.

The best part: this is not only for deleted engines. You can run it on a completely stock engine with the EGR intact. No emissions equipment removed.

Note, on a stock engine without a tune, this will cause a P125A00 or similar CEL, as the ECU notices that the difference between temperature of coolant at engine outlet and temperature of cylinder head is less than 5 °C (9 °F). It is recommended to tune it out by a tuner, but you can run it without issue untuned. The CEL might be annoying.

Factory VW/Audi seals handle the sealing. Billet aluminum handles the abuse. You handle it once.