i believe the knock sensor has to do with the air fuel ratio and if the motor is running on the rich/lean side. knock is when fuel isn't properly being ignited. the knock sensor and the o2 sensor work together to make the engine run at its most efficient.
i only going on what i have learned trying to tune a dfi turbo buick motor so i could be off a little. i'm sure there are a few around here that can better splain stuff.
one thing i know for sure....replace it asap because it can cause other problems.