Perlite is a naturally occurring, non-toxic volcanic rock.  It is heated to very high temperatures to produce a lightweight micro-porous material. Perlite is used in horticulture as a soil amendment. Because of its high permeability / low water retention it  helps to prevent soil compaction.

Perlite is used wholly or partly in place or sand or grit in potting compost where it improves aeration, draining and insulation, and also facilitates re-wetting. Perlite speeds up rooting and reduces the risk of damping off.  It provides an optimum balance of air and water -  makes water logging almost impossible

Improves the texture of heavy silt or clay soils by increasing aeration and drainage.

Perlite improves aeration and drainage in compacted and poorly drained areas on old lawn and also helps the establishment of new grass. Perlite will greatly assist the air-moisture balance and ensure better root development and grass (lawn) growth. Use a hollow tine spike all over the affected area, then spread a thin layer (2-5mm) of damp perlite pre-mixed with a suitable fertilizer. Rake or brush evenly, and water thoroughly. Note: a 100 litre bag of perlite will give on average a 2mm layer over 50 sq.m.

Perlite is better than vermiculite at improving aeration. Including perlite will create a mix that has more macroporosity.  That is the spaces between perlite particles are big enough to allow water to drain through them whilst also allowing for water-retention and the effects of capillary action in small surface crevices.

Vermiculite is a better water-holder. Vermiculite is more sponge-like and has a higher water holding capacity than perlite. Perlite particles can only hold moisture in the small bubbles on their surface

 For seed germination, where near-permanent moisture is required, vermiculite is ideal. Seeds germinate and grow much better in moist conditions and for this reason vermiculite is a good medium for germination.

Perlite is better for cuttings due to to its high macroporosity. Cuttings tend to benefit from having access to lots of oxygen as well as water

As an addition to a potting mix: vermiculite for increasing water-holding capacity, perlite for improving drainage (air porosity).