When MIG/MAG welding in the dip transfer mode the welding wire electrode touches the work piece/weld pool and this results in a short circuit. When this short circuit occurs the arc voltage will fall to nearly zero. This change in the arc voltage will cause a change in the welding circuit.
The fall in voltage will cause a rise in the welding current. The size of the current rise is dependent upon the welding characteristic of the MIG power source.
Should the power source respond immediately then the current in the circuit would rise to a very high value. The rapid increase in current would cause the short circuited welding wire to melt similar to an explosion creating a large amount of molten weld spatter.
By adding inductance to the weld circuit this will slow down the rate of current rise. It works by creating a magnetic field which opposes the welding current in the short circuit thereby slowing the rate of rise. If the inductance is increased it will cause an increase in arc time and reduction in the dip frequency, this will help reduce spatter.
Depending on the welding parameters there will be an optimum inductance setting for the best welding conditions. If the inductance is too low then there will be excessive spatter. If the inductance is too high the current will not rise high enough and the wire will stab the weld pool with insufficient heat.
The modern technology welding power sources often have the ability to provide the correct inductance to provide excellent weld characteristics. Many have a variable inductance control to give precise control.