Wire Ferrules are used on wires inserted into the IEC (European) style terminal blocks. The purpose being to create a better connection to the block. How do they do that? Well if you tried to connect the wire to the block the connection would be weaker. This is due to the stranding of the wire splitting.
Wire Ferrules keep the wires from stranding by jacketing the wire. This contains the wire and provides a more solid connection. Ensuring that no wire breaks while tightening the connection.
How do you use a Wire Ferrule? The wire is stripped to a length appropriate to the gauge. The Wire Ferrule slides over to the wire with the aluminum jacketing the wire. The Nylon ends at the location end of the casing. Then a tool creates a crimp sealing the wire and protecting it. Proper crimping pressure and technique are key to ensuring continued performance. Some users also add heat shrink to the cover the connection. That is dependent on the connection.