Three basic types of heat transfer: conductive, convective, and radiant (or combinations thereof). Heat shields definitely reduce radiated heat transfer. Color is also important in that a light color reflects the heat source as opposed to black which would absorb heat. Consequently heat shields are usually nothing more exotic than bare metal stampings - the bare metal color (silver) reflects the heat back toward the source. Things still get warm, but not as hot as they would be without the shield.
Conversely, the body of the starter, painted black, aborbs heat. Always wondered why the starter body was painted black insstead of some lighter color.