Actually there are two sets of O2 sensors. 2 up stream from the cats, and 2 down stream. The upstream provide feedback for the air/fuel ratio. The ones downstream actually monitor the operation of the cats by comparing the amount of 02 before and after. In a properly operating cat almost all the 02 entering will end up as H2O.
If you have no cats, then the up and down stream sensors will read the same, and the computer throws a code. The MIL take care of that. Basically they're just two resistors and a cap which just gives a steady output of about .9V.
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