What is the purpose of using drive spacers?

They space your lower unit down. If you needed an extra 1" depth use a 1" spacer. The come with a longer splined coupler. Some people will buy a 2" shorter drive and then if it is too short they could use a spacer to lower it agian. I think they are in the $500 range

I was talking about the spacers that extend the whole drive further away from the transom. maybe they are called gimbal spacers ime not sure

Well, there are two basic kinds. Land & Sea makes one that installs between the drive and the gimble. The advantages are that it's easier to install and doesn't require removing the transom assembly or hydraulic steering. The disadvantages are that it will stress the gimble assembly more and requires a permanent modification to the trim rams. This spacer is really limited to less than high performace applications.

The other type goes between the transom assembly and the transom thus moving the entire assembly back. The advantages are the increase in strength and the ability to raise the x-dimension. The disadvantages are the increased rigging cost and the need for a full hydraulic steering sytem. These systems are the only choice for high performance applications.

The primary function of the extension boxes are to put the prop further back into cleaner water and to provide more leverage for the prop to help carry the bow both of which to add to a higher speed.

I wonder if an extension box would also help with planing in a application with a ultra-high x-dim. I'm thinking that as the bow rises, the set backed drive would forced deeper into the water thus reducing cavitation. Anybody?

OK Cord you lost me. What is this x dimension your talking about?

X dimension is the measurement taken to determine how low/high your drive is mounted relative to the transom. Can't remember the specifics of how its measured.