The insulation is for safety. It will prevent the fuel from spilling or spitting out while in use.

This stove is pressure based, and not very efficient. The Penny Stove is by far the best design, but very hard to make compared to this little guy.

The best alcohol fuel is denatured alcohol, or methyl spirits. Heet is much easier to find, however. Almost all gas stations across the US carry it - it's a common fuel additive that is 99% methanol.

Thanks to Neatorama for posting my video!