Remember that Termination reduces signal variation so it does not go out of range. On short cables using a slow speed SCSI-1 or SCSI-2 controller you may not need termination, however long runs of cable can pick up more interference making the signal swing to a point that the data is unreliable. Termination within the cable usually does not "over dampen" the signal, but a failure to terminate devices at the cable ends (the furthest from the controller) may cause problems with erratic signals reaching the last device.
SCSI-1/2 are all right with simple resistor packs, but as cable lengths increase or speeds increase, an Powered/Active Terminator uses an active circuit to force the signals to stay in range. This is why SCSI-3 absolutely must have Active, Powered Termination on both ends.
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