Sludge seems to be the breaking down and "Globbing" of Old, heated Oil that hasnt had its acid neutralized into a tar-looking, sticky or hard, coating, on engine innards. A little more serious than Varnish which is just a stain.. it may cause issues, some are really bad. The fear is, a piec of "Sludge" can break off and act as a rock flung at x-thousand number of RPMs into a valve, killing it. Some people try "Engine flushes" if they are brave, to dislodge it and simply have it come out of the fill hole. Though ive never heard of an engine "Dying" that way, many like other things. Its a weird thing, sludge.
Redline, Royal Purple, and Mobil 1 0W-40 all clean the inside of an engine very well they just wont tell you they do. Pennzoil Platinum is not as agressive as Ultra, but it comes in grades Ultra does not and also does a great job.
There are those that will say Sludge cleaning isnt necessary. There is also this thing called Auto Rx that you can use with Castrol Syntec or a conventional oil, that will clean at least as good as and some say better than Ultra.
The logic, also, is that more sludge = higher heat = inneficient engine = more sludge = more wear/money/gas, repeat. Putting MMO in the gas, though i does not touch the oil, also helps "Clean sludge" though not if the Oil type, IIRC. MMO in GAS does no harm, and MMO in Oil SEEMS to not either, though it may not be needed. Maybe. It may have benefits, some hate it because its not Oil. The answer will take a LOT of reading, but its an "Approved sludge lessener" for way less than MMO.
Synthetic also claims to have "Beaten sludge," unofficially, fro the synthetic aficionados (Group III or whatever group, Castrol Syntec is Group III for ARX use it can work) in that many synthetic engines dont seem to have any where it was used, though someone else is quite good at saying "Its synthetic so what" and it makes for compelling debate and ponderance.