1. Reducing aerodynamic lift: At highway speeds, air flowing under the car can create lift, pushing the front end upward. This lift increases drag and reduces stability. The air dam, being a low-slung extension of the front bumper, acts as a barrier, disrupting the airflow under the car and reducing the amount of air that gets underneath. This reduces the lift, resulting in better high-speed stability and handling.
2. Smoothing airflow: The air dam helps to smooth the airflow around the underside of the car. A smoother airflow reduces turbulence and drag, which directly translates to better fuel economy. The Aurora, being a relatively aerodynamic car for its time, benefitted significantly from this.
In essence, the air dam acts like a small spoiler on the bottom of the car, but its primary function is to manage airflow *underneath* rather than above. A properly functioning air dam contributes to a more efficient and stable driving experience, especially at higher speeds.