Although already known for a long time, hydrated lime (HL) attracted a strong interest as an asphalt additive during the 1970s in the USA, when moisture damage and frost became some of the most pressing pavement failure modes of the time. Given its extensive use in the past 40 years, HL is known to be more than a moisture damage additive: it is an “active filler” that also reduces the chemical ageing of the bitumen and stiffens the mastic more than a normal mineral filler above room temperature. These properties impact durability, and HL is now seen as an additive that increases asphalt mixture durability. This article is a literature review on the fundamentals of the effect of HL on asphalt mixtures. The reasons for it being so effective lie in the strong interactions between both the aggregate and the bitumen and a combination of four mechanisms, two on the aggregate and two on the bitumen. HL modifies the surface properties of the aggregate, allowing for the development of surface composition and roughness more favourable to bitumen adhesion. Then, HL can treat the existing clayey particles adhering to the aggregate surface, inhibiting their detrimental effect on the mixture. Also, HL reacts chemically with the acids of the bitumen, which in turn slows down the age hardening kinetics and neutralises the effect of the “bad” adhesion promoters originally present inside the bitumen, enhancing the moisture resistance of the mixture. Finally, the high porosity of HL explains its stiffening effect above room temperature.