The o2 sensor (oxygen sensor) is located within the exhaust system, upstream of the catalytic converter.
Its role is to inform the ECU of the oxygen content of the burned gases that result from combustion. The o2 sensor helps to ensure that the amount of fuel injected into the cylinders for the air-fuel ratio is at an ideal level.
The o2 sensor ensures low fuel consumption as well as reduced pollutants emitted from the engine. It is therefore an important component to help pass vehicle inspection.
The latest standards of emissions require the presence of a second lambda probe, located after the catalytic converter in order to determine its effectiveness.