With the information from the sensors, the PCM knows the conditions in the engine, how much air is flowing and therefore, the desired load to be placed on the engine. But how does the PCM know the amount of fuel to inject? This is the main function of the oxygen sensors. The oxygen sensors generate a small electric current, with voltage varying from around 0.1 to 0.95 volts. Less voltage indicates a lean condition and more voltage indicates a rich condition. They measure the difference between the amount of oxygen in the exhaust and the amount of oxygen in the atmosphere.
Since the PCM knows the amount of air and fuel entering the engine and, from the oxygen sensors, the amount of oxygen remaining after combustion, it can determine if the combustion process was rich or lean. This is a direct feedback system and enables the PCM to "Close the Loop"!
Because the feedback from the oxygen sensors can only be applied “after the fact”, it causes the PCM to “chase its tail” to achieve the correct combustion. This chase can be observed clearly in the oxygen sensors’ output, which under everyday driving conditions looks like a wave.
The combustion process is constantly oscillating between rich and lean. As long as this process continues to change from rich to lean in a timely manner, the PCM “knows” that the combustion is within acceptable limits. If the oxygen sensor voltage stays high or low for too long, then the PCM adjusts the amount of fuel delivered by the injectors. This adjustment is called the Short Term Fuel Trim (STFT) correction.