Exhaust upgrades allow the spend fumes to exit the engine more freely and rapidly. The factory exhaust on the 7.3 Powerstroke was made to be as quiet as possible for the stock configuration but it is also very restrictive when making more power. Upgrading the exhaust is highly recommended when adding more power to the engine. A larger exhaust system sounds more aggressive, looks better with a tip installed, and provides power and economy through a more efficient engine.
A larger exhaust system doesn't always equal more power. A 4 inch exhaust provides enough flow up to 450 hp+. Over that a higher flow 5 inch exhaust has a slight benefit. The 5 Inch exhaust has a low deeper sound overall. Aluminized steel exhausts are cheaper but are prone to rusting in northern climates after some years. Upgrading to stainless where environmental conditions are harsh can be a good investment.