That's not a dumb question at all, in fact it makes a lot of sense to wonder about that. I don't know what the answer is, but have wondered about it the same as you.
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Cables act like antennas. The longer the antenna (Cable), the better they pick up signals. If you have an 8 foot unshielded cable, you in effect have an 8 foot antenna. By applying insulation, you reduce the effective length of the antenna i.e. cable from picking up EMI and RFI. You can never eliminate the effects of the cable from picking up EMI and RFI, but the application of insulation will reduce the effects substantially.
Insulation (usually plastic) is for keeping electrical shorts from happening. It does not primarily serve as a shield from EMI and RFI (both of which are just terms for the same thing because radio waves are electromagnetic waves). Insulation does not shield. A shield shields. A shield is made out of a conductive material. An insulation is made out of a non-conducting material.
If you are referring to speaker cables, where the cable is huge and the endings are thinner, this is mainly just for flexibility and ease of use. It is a "necessary" compromise because you have to hook up the cable somehow, and each speaker manufacturer has different widths between their input terminals.
Thanks, Brf's explanation makes sense. I use Purist Audio speaker cables. The body of the cable has shielding, the leads do not, as Louis M. points out. The leads on Purist Audio speaker cables are especially long--about a foot on either side. So instead of the entire cable acting as an antenna, only the leads might, which is much better than the whole cable!
If they kept it the same size all the way through on interconnects most would have an issue plugging them into or out of thier equipment. As for speaker cables, you would not be able to bend the cable without kinking it when you are trying connect them to your amp and speakers.
There is only about an 1/4" clearance between connectors on my Meridian G68 and an 1" on my Ref3, so the cables would have to be no more than 3/8'RCA or 3/4'XLR in diameter or less for me to be able to use them. My speaker connectors are only 4' off the ground and my amps are even closer so keeping the thickness to the spade connectors is useless. If you cannot connect it to your equipment what good is the cable.
Shielding is much less important for speaker cables than for interconnects, because the extremely low output impedance of the power amplifier, and the low impedance of the speakers, will tend to "short out" most or all emi/rfi which may be picked up. And also because emi/rfi tends to be at both low levels and ultrasonic frequencies, meaning that the speaker is unlikely to respond to it to a significant degree.
A case could even be made that shielding is even less important for speaker cables than for amplifier power cords. Shielding in the power cord supplying a power amplifier will prevent the escape of emi/rfi that may be caused by inductive kickback from the amp's power transformer, which otherwise might couple into other parts of the system.
BTW, I agree with Krell_man that the op is not a dumb question at all.