Broadly speaking there are two different types of O2 sensor available, wideband and narrowband. Both sensors have their place in tuning an engine, narrowband sensors are designed to be used in conjunction with a catalytic converter.
In brief a catalytic converter works on a saturate/starve principal where the fuel injection system saturates the converter then starves the converter, i.e. it runs rich of 14.7:1 (saturate) then lean of 14.7:1 (starve) and as such a narrowband O2 sensor only reads rich of 14.7:1 or lean of 14.7:1.
Unfortunately a narrowband O2 sensor is unable to determine exactly how rich or exactly how lean the engine is running making it useless for full power engine calibration (as under full power we need to run the engine much richer that 14.7:1 so we don’t melt pistons!).
A wideband O2 sensor on the other hand is designed to read a much broader spectrum of air to fuel ratios (The Haltech CAN wideband reads accurately from 10:1 – 20:1 air fuel ratio) which makes it the ideal tool for engine calibration.
For engine calibration purposes, diagnostic purposes, datalogging and performance work a wideband O2 sensor is the correct tool for the job. For emissions related purposes used in conjunction with catalytic converters a narrowband O2 sensor is essential (normally with a wideband O2 sensor in place as well for the full power engine calibration).
The added benefit of using the new CAN wideband controller with your Haltech ECU diagnostic information about the sensor is now being broadcast out to the ECU. This additional diagnostic information is used by the ECU to determine if the sensor is up to correct operating temperature, if the sensor has a short or fault condition or if the sensor is has become disconnected. In any of these circumstances the ECU will automatically turn off closed loop O2 control (if its enabled) and run in open loop mode.