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The knock sensor is a piezo sensor (similar to the sparker in a lighter, deforming a crystal causes a voltage), so if there's no knock, there's no voltage input and the computer thinks everything is fine. If the sensor is unplugged, there's no input, which the computer reads as no knock and thinks everything is fine. Even if there is knock input, the computer will retard the timing to stop the knock, which doesn't prevent spark.
