http://www.explainthatstuff.com/how-bicycle-helmets-work.html
How does a bicycle helmet work?
At first sight, a cycle helmet looks much like any other hat, but look more closely and you'll see a lot more thought—and science—has gone into the design. A typical helmet has two main parts: a hard outer shell and a soft inner liner. The hard shell is designed to spread the force of an impact over a broader area so your skull is less likely to fracture, while the soft liner is meant to squeeze inward and absorb the impact
energy, so less of it is transmitted to your head.
Bicycle helmets are a good example of how the right material can make all the difference to how well something does its job. Shells are typically made of
composite materials like fiberglass or lightweight carbon fiber, or very hard
plastics such as polycarbonate or ABS. Liners are usually about 20cm (0.8 inches) thick and made of two layers of foam: a soft, bouncy layer that absorbs small bashes and bumps and a stiff layer that permanently deforms to absorb very hard impacts. Some helmets are now incorporating
energy-absorbing plastics like D3O® that are soft in normal use but harden instantly the moment you hit them, but most still use cheaper and simpler materials like expanded polystyrene (EPS) or expanded polypropylene (EPP).
Photo: How a helmet saves your life: When you bump your head, the hard outer shell (black) spreads the impact over a wide area. The whole of the soft inner liner (orange) then absorbs the energy evenly so (hopefully) there's minimal damage to your head. Without the helmet, the entire impact would be concentrated on a tiny part of your head, very likely fracturing your skull and quite possibly damaging your brain too.