The camshaft position sensor sends a signal to the ignition module or the electronic control module (whichever computer is responsible for telling the coils when to fire). This signal carries information on where the camshaft is (and, thus, where each piston is). The information is critical, because an engine can only run properly if the spark plugs fire near the top of the compression stroke, and the computer would be unable to adjust the ignition timing to compensate for driving conditions without that information.
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