Source: http://www.npr.org/blogs/thesalt/2014/08...

That's because the alkaline lye bath affects the way the Maillard reaction plays out when the pretzel bakes, says Bread Science author Emily Buehler. The Maillard process is integral to all bread baking — it shapes the way the crust forms and tastes. In the case of the pretzel, the Maillard reaction is responsible for the deep brown crust, crunchy arms and distinctive taste.

At its most basic, the Maillard process is a heat-activated reaction between small sugars and amino acids. Dipping dough in lye alters the ratio between sugar and protein, because lye breaks proteins present in the dough into smaller bits. Those are the small amino acids that then combine with sugars in the dip to create the flavor compounds at the pretzel's crust.

My mom always told me that lye was what made a German pretzel different from an American pretzel, but that doesn't necessarily seem to be the case.

She doesn't even use real lye, she just puts in massive amounts of baking soda to make a stronger solution. But she still insists that she hasn't found a good Oktoberfest pretzel in the U.S.