The knock sensor is supposed to retaerd timing if it detects spark knock - which is not a big problem for us. Why? Low compression ratio.
However, if you any towing or similar high-sload low-speed, keeping the knock sensor is a good idea - and you should get a new one if possible.
How it works - the knock sensor is a piezoelectric device, meaning that it is centered around a crystal that generates a small electrical impulse when vibrated or "knocked." It is possible that the crystal can lose its piezoelectric properties in the presence of excess heat and/or vibration, so renewing it isn't a bad idea. How often? I'm not sure - but I see no reason it can't last well over 200kmiles. Piezoelectric devices usually use a quartz chip, and quartz is a pretty hardy crystal.
If there is no knock sensor, the ECU will not get a knock signal, and the timing will remain static within the limits of the advance curve. The knock sensor is only really noticed if it has anything to say.
5-90