Argthtjtr

We moved into a new house and I see these cables in our garage. They come from the ceiling and are right near our water heater and breaker panel. There are 2 cables. One cable is labeled “System to House” and the other is labeled “Back to Main”. One of the cable jackets says that it’s CAT-5e cable, but this doesn’t look like any Ethernet cable that I’ve ever seen, especially with those weird things on the end (LEDs, sensors?)

Any idea what these are?

I can't quite be sure from the picture, but the red things are each joined to a wire from one of the two cables, right? If so, they're just splices, like wire nuts but for this kind of wiring.

So, this part doesn't tell us much about the purpose of the wiring. It could be any kind of signaling cable, though having the wires untwisted like that (and having only two connected, even) would not work for high-speed Ethernet.

It could be a telephone line (likely, except the labels seem a bit odd for that), part of a security system, or some kind of home automation. You will need to find the other ends of the cables to learn what they're used for.

If there are cables elsewhere that might be these but you aren't sure, you can get a "tone and probe" kit to send a signal on one of the unused wire pairs of one of the cables and wave the probe around other ends (or even through a wall) to detect where it runs.

Those red things are a 3M Skotchlok or equivalent, which is a water-resistant (gel filled) way of joining small wires. Very common in the telecoms industry, though they don't work particularly well at high frequencies.

Especially as only one pair (two wires) is joined, this is almost certainly a joint in your telephone line.

Cat5e and similar is often used for telephone line - it is almost the same price as older Cat3 cable, can easily be converted to Ethernet usage in future, and can provide better performance when used for things like VDSL.

As other answers have pointed out the things on the end are "jelly crimps" typically used to join phone wiring.

My guess would be that the previous owner had some kind of telephone related equipment* installed at that location between the incoming line from the telco ("back to main") and the wiring to the phones in the house ("system to house") and that when he removed his equipment he spliced the wires together so the phones would work.

* Maybe a filter for a DSL modem, maybe a fax machine, maybe a VOIP gateway, maybe a full-on PBX.

These could also be for HVAC. I installed a cat5e net for a client once only to have another contractor use it for his HVAC cabling. Populated my punch downs and everything. We were all furious but we learned that twisted-pair telephone wire is used in a lot of applications we don’t realize.

Those red things are simply splices. If you look they are connecting or "splicing" the two wires there.

Now what do those wires do?

Probably a phone line. Do you have wired phone jacks in your house? If you do, then I'd be 90% sure that is a phone line.