Is it fiberglass, it looks like foam?
Yes the business owner is absolutely right. It is fiberglass. That is added as a safety feature. It keeps the risk of fire away. Don't remove it!
It is thermal insulation. It is usually fiberglass. The foil is for mounting against a wood/combustible ceiling. A non-burning barrier is required. The insulation is so the heat if the lamps doesn't cook the wiring. Most contemporary units are 90 degrees C. Half of the homes have 60 degree C wiring, so they're damaged anyhow.
Yes, it is fiberglass, intended to keep heat from the incandescent bulbs from overheating the ceiling. The foil is to reflect radiant heat for the same reason. Note that flourescent fixtures, which run much cooler, have neither of these heat barriers.
