The story of the Tortoise and the Hare

Imagine the hare is your unrestricted alternator; it races ahead at full output, hits the temperature threshold and the regulator backs off, so the hare is resting and cools down and then races ahead again heats up and cools down over and over. 

Meanwhile, the Tortoise or derated alternator is plugging along at a slower pace never hits the temperature threshold and just plugs along.  In the end the Tortoise probably produces more output and wins the race. In addition the tortoise has a lot less stress and lives a  longer happier life.

You have to realize that you are producing enough electricity to run a small apartment with a piece of machinery the size of a can of coffee, heat is going to be generated so you have to account for that. 

Thanks to Tim McVey of Balmar for this excellent explanation.