Why Use Insulator Discs?

Insulator discs are very effective at preventing the negative and the positive on the top of the cell from becoming shorted. In 18650, 21700, and other cylindrical cells, the entire outside of the cell is the negative, not just the flat end of the cell.

If you follow the negative from the side all the way up to the positive end of the battery, you will see that even at the very top on the perimeter, the battery is all negative. You will find the positive on the inside of the top end of the cell, surrounded by an insulating gasket that separates it from the negative.