I think you are referring to the crankcase breather in a piston engine. This allows the pistons to move without compressing the air beneath them and therefore run more efficiently.
Because there is a lot of oil around in the crankcase, some of this will get vented with the air through the breather tube (especially when flying aerobatics). The separator uses a centifugal flow to separate the oil from the air, collect it and return it back to the sump, thereby keeping the belly of the aeroplane clean and the oil tank full.
Look up the Christen or Raven systems for a full explanation of the aerobatic inverted oil system.