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There are two types of heat - dry and moist.
Dry heat is bad for the hair as is does just what it implies - it dries out the hair Moist heat, specifically heated oils, work to restore moisture to the hair ... the heat helps it absorb into the hair follicles.
It's important to remember, though, that when you heat up an oil for your hair, you don't make it unbearably hot. You should be able to feel the heat, but not so much that it burns.
How much heat? Heat can damage hair when you use straighteners, but warm water does open the cuticles and allows moisture to be absorbed. Maybe they mean to heat up the olive oil a little bit (not boiling hot) and apply it on your hair so it absorbs better.