So far there isn't a weather/insect proof coating to apply to wounds.

Every time the cambium is broken there is a wound. The larger the wound the more decay. At some time those decay pockets could lead to a tree failure.

The understanding of some tree physiology is much too complex for a discussion forum. Never fear though There is plenty of information on the web that you can ingest at your leisure.

Here are some terms to google:

Alex Shigo
CODIT-which stands for Compartmentalization of Decay in Trees
Ed Gilman
Ed Hayes hazard trees