These are the bits that actually take the weight of the shoe/your power on the pedal - the cleat and 'locking system' do just that - hold the pedals in place, but they don't take the weight/power.
If those red bits get worn they won't reach the flats properly, and your shoe can rock about. Scheritt was able to rock mine side to side to quite a scary degree. The rubber/plastic bits didn't reach the flats.
If those bits are worn out your shoes are not sitting properly on the pedal and aside from reduced power transfer there are potentially other issues - I went to him because I fucked my knee riding a 300 audax fixed but this could have been a contributory factor.
Huge thanks to @Fox for pointing this out. I have a pair of well loved Dominators that are now obviously well past their shelf life. My knee problems from my recent jaunt to the Isle of Wight are almost certainly cause by the large amount of float I had - I had attributed it to cleat positioning and the old shitty pedals on my Allez, not the worn sections.
Straight I went to Wiggle to grab me some Sidi Eagles (with replaceable soles) that were recommended, however I should warn people that the Eagles 5s don't come with replaceable soles, only the Eagle 6s.
The difference between Dominators and Eagles 5 is that the Eagles have a larger proportion of mesh/fabric compared to the almost all Lorica Dominators. (Basically a winter/summer variant of the same shoe).
Hope you guys don't make the same mistake as me! Ended up getting a pair of Carbon Dragons from sport Pursuit for only £50 more anyway...