The wastegate actuator takes a pressure feed from the turbos compressor wheel, which in turn feeds the engine with compressed air. As compressed air, for a given volume, contains more oxygen, the resulting mixture burns more intensely giving more power for a given cubic capacity than a normally aspirated (non-Turbo) engine.
On all turbo cars currently in production, the maximum boost pressure which the engine "sees" is ultimately controlled by the wastegate actuator.
The sole job of the wastegate actuator, is to act as a pressure relief valve that controls the turbocharger boost output.
The main parts of an actuator are the spring and diaphragm, the spring holds the wastegate shut until the turbo is delivering a predetermined boost level and then opens, allowing the exhaust gas to escape and slow the turbine.
When the actuator and wastegate are new, the engine will reliably produce the full power figures expected from it, however, when they begin to age the constant cycle of heating and cooling has an adverse affect on the spring which ultimately weakens it. This will then allow the wastegate to open prematurely, whilst the turbo is delivering a lower psi than it should be doing.
The diaphragm itself can fail as well, this can cause severe engine damage due to the turbo having no more boost control, it will literally keep going and going until either the engine management takes over and cuts the ignition or... something gives way!!
Many companies who either try to save money or do not fully understand turbocharged engines, carry out tuning of a turbocharged car by fitting a bleed valve with your old, worn, standard actuator. They should really be called "leak" valves because that's all they do! They introduce a controlled air leak into the actuator pressure line so that the turbo has to produce more boost to open the wastegate due to some boost leaking away, What a waste of good boost!! Whilst this will give an increase in power, it will not be constant, because, although you have "fooled" the actuator into opening the wastegate later, allowing more boost, under high loads when you really need that power, the boost will force that spring open! For example:
Do you really think that old, worn out 6psi spring in your cosworth will keep the wastegate shut with 16psi of boost pushing against it?? NO!! Just watch the boost gauge if you have one and you may see the boost climb rapidly to a peak and then drop off substantially, this is the actuator spring being overcome by the boost pressure forcing the wastegate open regardless of your actuator spring!! 
T3/T4 hybrid clearly shows the
actuator canister and arm that
opens the wastegate.... External wastegate An external wastegate set up will be required once you out flow the capabilities of the integral(internal)wastegate of your particular turbo....there are a few brands of external wastegates on the market and they come in various sizes depending on your requirements.A boost controller is more than likely required too.Externals also sound real cool ;-)
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*When upgradeing besure your turbo includes a wastegate actuator of the correct poundage to keep that wastegate closed, until it is required to open, giving you maximum boost at all times, even at peak load!:-)
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