Styrofoam is a good insulator because the plastic foam contains billions of trapped gas bubbles. Gases hinder heat conduction because their molecules are very far apart making it difficult for other molecules to collide with them. When molecules DO collide, they either give or take away energy.
The polystyrene plastic in between the bubbles is also a good insulator. Its molecules are so big that they can't move around much - thus hindering heat transfer.

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