from VGRC.net

As some of you may already know, when Nintendo of America was bringing the Famicom system to America, they wanted to enforce some really strict content regulation on 3rd party games. In order to do this, they designed the 10NES lockout system, which comprised of a chip on the system’s board, and a chip in the game cartridge. When plugged in, the chip in the cartridge would send an authentication code to the chip on the board, letting the system know it was an authorized game. By keeping exclusive control over the lockout system, Nintendo kept complete control over what games were published for the system, requiring third parties to go directly through Nintendo and their Draconian censorship policies. As history isn’t the focus of this article, I won’t go too in-depth on this. But if you care to read this in much greater detail, click here.

Keep in mind that the lockout chip was removed from the NES 2, so if you are an owner of that version of the NES, this article doesn’t really apply to you.

Anyways, there are 3 main reasons one would want to disable the lockout chip:

1. To be able to play homebrew or unlicensed games on their NES.
2. To be able to play PAL (European) NES games on your system.
3. The lockout chip is also a factor in why your NES won’t start up, turning itself off and on when you try to play a game. Though a very light bit of dust will otherwise not affect the game, it can impede the timing of the 10NES chips. Disabling the lockout can ease quite a bit of frustration (no longer having to blow into the cartridge!) but it is still recommended you regularly clean your cartridges and cart contacts inside the system.