How does a cam sensor circuit work?

Answer 1

The cam sensor is a hall effect sensor, it is basically a transducer that varies it's signal or output voltage in direct response to changes in the magnetic field generated by the rotating camshaft and the magnets installed into it.
The OBC ( on board computer or ecc engine control computer ) uses the information to time the spark and injector firing. This was formerly done mechanically by the distributor and a set of gears. The sensor approach has proved to be much more reliable and precise, and allows computer enhanced timing changes to be made while the engine is being operated providing better efficiency and adaptation to changing conditions and driving needs.