http://www.keystonemg.com/tech/conv-silicone-brake-fluid.html said:
D.O.T. 3 and D.O.T. 4 brake fluids are glycol-based, while silicone-based fluids are classified as D.O.T. 5.
Glycol-based brake fluids in particular, are hydroscopic (moisture absorbing), some more so than others. When water is absorbed, the boiling point is sharply lowered. This occurs because water boils at only 212° F. When brake fluid is mixed with water, the boiling point of the mixture is less than that of the "dry" brake fluid. See chart for D.O.T. minimum boiling point specifications.
Water contamination also leads to corrosion of brake pipes, wheel cylinders, calipers, and master cylinders, resulting in pipe leaks, "frozen" cylinder pistons, accelerated seal wear, and the formation of sludge. Silicone fluids avoid these problems by being non-hydroscopic (not moisture-absorbing), while glycol fluids can absorb as much as 6% water just by being in a "sealed" automotive hydraulic system for a few years. This moisture is generally absorbed from the air. Some moisture even works its way into brake hoses. Most comes from master cylinder cap vents and resultant condensation in the air space above the fluid, and from allowing cans of brake fluid and master cylinders to remain open to the atmosphere for too long. Silicone fluids absorb a tiny amount of moisture (on the order of 280 parts per million, or .0028%) and then absorb no more.
Silicone fluids, in addition to having high boiling points and being non-hydroscopic, do not damage paint as do glycol fluids. This is of particular importance in regard to show cars where a spill or leak of glycol fluid can have seriously ugly results. There are, however, some disadvantages to silicone fluids. They are slightly compressible, particularly near the higher end of their temperature range. While this is of absolutely no consequence for normal street use, this is why silicone fluids are not used in race cars. (Conversely, racing hydraulic fluids should not be used in street cars. This is because, although racing brake fluids have high dry boiling points, most are highly hydroscopic, and have relatively very low wet boiling points. They would probably work extremely well if you were to change the fluid every week or so.)