How does an O2 sensor work?

An Oxygen sensor is a chemical generator. It is constantly making
a comparison between the Oxygen inside the exhaust manifold and air
outside the engine. If this comparison shows little or no
Oxygen in the exhaust manifold, a voltage is generated. The
output of the sensor is usually between 0 and 1.1 volts. All
spark combustion engines need the proper air fuel ratio to
operate correctly. For gasoline this is 14.7 parts of air to one
part of fuel. When the engine has more fuel than needed, all
available Oxygen is consumed in the cylinder and gasses leaving
through the exhaust contain almost no Oxygen. This sends out a
voltage greater than 0.45 volts. If the engine is running lean,
all fuel is burned, and the extra Oxygen leaves the cylinder and
flows into the exhaust. In this case, the sensor voltage goes
lower than 0.45 volts. Usually the output range seen seen is
0.2 to 0.7 volts.

The sensor does not begin to generate it's full output until it
reaches about 600 degrees F. Prior to this time the sensor is
not conductive. It is as if the circuit between the sensor and
computer is not complete. The mid point is about 0.45 volts.
This is neither rich nor lean. A fully warm O2 sensor *will not
spend any time at 0.45 volts*. In many cars, the computer sends
out a bias voltage of 0.45 through the O2 sensor wire. If the
sensor is not warm, or if the circuit is not complete, the computer
picks up a steady 0.45 volts. Since the computer knows this is
an "illegal" value, it judges the sensor to not be ready. It
remains in open loop operation, and uses all sensors except the
O2 to determine fuel delivery. Any time an engine is operated
in open loop, it runs somewhat rich and makes more exhaust
emissions. This translates into lost power, poor fuel economy
and air pollution.

The O2 sensor is constantly in a state of transition between high
and low voltage. Manfucturers call this crossing of the 0.45
volt mark O2 cross counts. The higher the number of O2 cross
counts, the better the sensor and other parts of the computer
control system are working. It is important to remember that the
O2 sensor is comparing the amount of Oxygen inside and outside
the engine. If the outside of the sensor should become blocked,
or coated with oil, sound insulation, undercoating or antifreeze,
(among other things), this comparison is not possible.