MVS Sponsor FCP Euro wrote a nice summary of brake fluid. Like all automotive fields, this one has come a long way in the hundred+ years cars have existed. If you haven’t read the latest on brake fluid in a decade or two, or need to know if you can mix two different types of fluid, this is the reference for you.
Brake fluid is a hydraulic fluid designed to be used in hydraulic brakes. Most brake fluid types are miscible and will absorb water, so it should be flushed to make sure the brake system has as little water in it as possible. When brake fluid is contaminated with moisture, it will lower the boiling point. This can cause a dangerous condition if the brake fluid boils under heavy braking – the resulting bubbles will significantly decrease the ability of the hydraulic system to apply the brakes. There are several types of brake fluids on the market.