Insulation keeps the ice in our coolers cool. If you don't have a cooler, and you want to keep something cold - or hot - you can also just wrap it in towels or newspapers and put it in a bag to insulate it. I sometimes do that when I'm taking a pot to a potluck.

Insulation keeps our houses warm - or cool - too. My old house had a layer of polyurethane insulation on the roof and foam insulation blown into the spaces between the boards inside all the outside walls, and that helped a lot in keeping the house warm when the furnace was on or keeping the house cool on hot days.

The reason why cold object melts is because they absorb heat. The purpose of a cooler is to prevent the cold object, in this case ice, from absorbing heat. The way it does this is two fold; 1) minimize conduction of heat and 2) minimize convection.

Conduction is the act of heat moving from one object to another in the form of energy. The hotter something is, the faster the molecules move in it and the more they can transfer heat to cold objects, like ice. The cooler uses insulators to keep ice cool. Insulation is a material that does not conduct, or transfer, heat well. Styrofoam is a good insulator.

Convection is how heat moves through air. If warm air moves across a piece of ice it will transfer heat to it, causing it to melt. So, the second way a cooler keeps things cool is by staying closed. Having a insulated and closed container will prevent warm air from coming in contact with the cool ice. That is why the ice melts faster if you leave the cooler open too long. Hope that answers your question.