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A condenser is simply a capacitor which prevents voltage from arcing across the points when they open, in turn preventing premature wear on the points.

The condenser prevents arcing as follows. The condenser is wired in parallel with the points. When the points open, the voltage across the condenser can not change instantaneously. Because of this, the voltage will slowly rise across the capacitor as it charges. Because the points are wired in parallel with the capacitor, the voltage across the point gap will also rise slowly, preventing an arc.

The condenser on a Tomos A3. On this moped (and on many others) the condenser is located on the stator plate, and is accessed by removing the flywheel.