.. and as for Lambda sensors, Wikipedia has a good article.
http://en.wikipedia.org/wiki/Lambda_sensorEssentially the narrow band sensors used in most cars measure the balance of oxygen remaining in the exhaust gases. If the mixture going into the engine is rich (too much fuel) almost all the oxygen gets used up burning the fuel and you get very little left in the exhaust gas. A lean mixture results in almost all the fuel burning and some oxygen is left over, meaning a relatively high oxygen content in the exhaust.
The ideal fuel mixture, and the one where the balance of exhaust gases provide the right conditions for the catalytic converter to do its' job is somewhere between the two.
The voltage output of a narrow band lambda sensor underoes a rapid transition from about 0.2v to 0.8 v at this point, called the stoichiometric mixture.
During most running conditions (idling, cruising and gentle acceleration, with a hot engine) the engine management system runs in closed loop mode where it makes adjustments to the fuelling based on the lambda sensor output. The fuelling is constantly increased or decreased to keep the lambda sensor output "tipping" either side of stoichiometric. This is why people refer to Lambda sensors "switching". The constant corrections of the ECU cause the Lambda sensor output to cycle between 0.2 and 0.8 volts.
Put your foor flat on the floor and a stoichiometric mixture will give you poor performance and rather high combustion temperatures, possibly leading to knock, burnt out exhaust valves and melted pistons. For this reason, under heavy load the ECU will go open loop, ignore the Lambda sensor and use the inputs from the other sensors to determine from a map what fuelling to use to provide a considerably richer mixture. Stoichiometric mixture is a ratio of 14.7:1 air to fuel by mass. Under full load a normally aspirated engine will need to richen to probably around 12.8 - 13:1 for maximum power output. For a turbocharged or supercharged engine the mixture needs to be stinky rich - often 11 - 12:1). A narrowband Lambda sensor can't measure this rich so its' output is ignored in open loop mode.
A wideband Lambda sensor works over a much wider range of fuel mixtures and responds faster so an ECU can remain in closed loop operation over the whole range of engine operation. They are not widely used, but when they are, it's usually on turbocharged or supercharged engines where it's important to control the fuel mixture at a rich level under boost to protect the engine. They are also rather useful for mapping engines because they tell you exactly what's going on fuel-wise.
When a sensor dies it generally stops responding to the mixture or responds too slowly. The ECU will detect these conditions and light the EML so you don't need to change the sensors as a matter of course.
Kevin