Just talking a little sideways on the subject, but the heater/bypass from the thermostat housing to the the water pump, either through the heater core or through the heater valve or "T" (whatever is applicable) bypasses the thermostat and helps make the thermostat more responsive.
Picture at start up, you have cold coolant next to the thermostat, little flow and hotter coolant piling up behind that, as the engine warms up (without the bypass). Or the thermostat opens some and eventually cooler coolant flows to the thermostat, it closes and hotter coolant backs up behind that (without the bypass). Fluids of different temperatures mix slowly and often don't pass much heat, they homogenize slowly, if at all,. depending on how much they are agitated.
You put the wrong gasket behind the thermostat and cover up the bypass and you are going to get some wild swings in your temperature gauge. Ask me how I know this
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Back in the day when we built hot rods, we disconnected the heater and plugged the bypass/heater hoses, we learned quick you had better take out the thermostat and throw it away (or run a loop in place of the heater core) or you were going to overheat. The hot coolant was going to back up, in high horsepower motors, behind the thermostat and the motor would usually overheat before the thermostat opened.
Somebody mentioned the heater valve becoming plugged with deposits, this can also cause some pretty wild swings in the temperature gauge for the reasons mentioned above.
I don't have much of an overheating problem here, but have thought if I lived in a hotter climate, I'd pull all of the rubber heater/bypass tubing out and replace it with soft copper tubing. Just rubber on the ends to make hooking it up easier and to give it a little flex. Copper is a conductor, rubber in an insulator, you could likely radiator a couple of hundred watts through the copper lines. Every little bit helps.