I don't have any first hand experience with this sensor but I'm pretty sure it's some sort of "hall effect" sensor to provide engine RPM information for the tach, EDS and the KLIMA relay. Some part of the sensor should be mounted very close to the ring gear teeth and I suspect the teeth are used to trigger the sensor. The raw speed signal is fed to the EDS computer which processes it and produces variable frequency two volt AC signal which is then distributed to the various systems that are interested in engine speed data.