An impact driver is a tool that delivers a strong, sudden rotational and downward force. In conjunction with toughened screwdriver bits and socket sets, they are often used by mechanics to loosen larger screws (bolts) and nuts that are corrosively "frozen" or over-torqued. The direction can also be reversed for situations where screws have to be tightened with torque greater than a screwdriver can reasonably provide.
Manual impact drivers consist of a heavy outer sleeve that surrounds an inner core that is splined to it. The spline is curved so that when the user strikes the outer sleeve with a hammer, its downward force works on the spline to produce turning force on the core and any socket or work bit attached to it. The tool translates the heavy rotational inertia of the sleeve to the lighter core to generate large amounts of torque. At the same time, the striking blow from the hammer forces the impact driver down into the screw reducing or eliminating cam out. This attribute is most beneficial for Philips screws which normally cam out as part of their design. It is less beneficial for slot head screws and is not beneficial at all for most other types.
Another type of impact driver uses a motor to automatically deliver rotational forces. These have the advantage of greatly increased speed. They are most often used in construction and manufacturing to replace screwdrivers where speed and operator fatigue are an issue. In some situations however, this type falls short since current designs cannot deliver the downward blow of a manual unit. This can be especially true on very stubborn fasteners. It is a common misconception that motorized impact drivers deliver a downward force when in fact they deliver no downward force at all.
These are not to be confused with the impact wrench, which is a motorized tool (usually powered by compressed air), with a similar name and function. These also use a hammering action to apply torque to fasteners. The difference is that impact wrenches do not provide the positive engagement that impact drivers offer as mentioned above. Otherwise impact drivers and impact wrenches operate in essentially the same fashion.