Yes!, the knock sensor circuit constantly monitors the knock and inserts A NUMBER into the equation that adds/subtracts up to create a total number of degrees of advance. Just like coolant temp and air temp add or subtract values in the equation, just that the KS swings 3-4 times higher numeric depending on conditions.
When in fail safe a zero is inserted in it's numeric place in the equation.
The total advance might be 3-5-7 degrees less than optimum for cruise or acceleration......why the engine feels sluggish.
In summer heat gasoline usually knocks so even this 3-5 degrees is not anywhere near sufficient when the KS can remove 10=15 degrees to stop the knock.
You cannot hear knock with AC fan on high or radio on or windows closed.
At steady cruise advance might be 40 degrees and the very moment acceleration begins it might drop to 5 then ramp up to 20 [so called tip in retard to stop knock before it starts]. The rate of ramp up and exact number is controlled by KS circuit.
Prior to and during gear shifts the advance falls to zero then ramps back up to ~~ 20.................so lots od changes constantly going on.
"The ECU monitors the detonation sensor and processes the voltage information into a measurement called "knock counts". Knock counts are reported to dataloggers for the OBDI models (1991-1993) and for 1994-1995 models. For OBDII models (1996+) knock detection is not reported according to the OBDII protocol. When the ECU detects knock above 8 counts (18.75% of 43) and engine load is above the third "load row", it starts to retard timing. If the knock count increases, the ECU continues to reduce timing advance up to a maximum of 12 to 15 crank-angle degrees. If knock counts reduce or remain constant, the ECU can advance timing. The number of degrees the ECU increases or decreases the "knock delay" is based on what is called the "octane value" (the long-term timing advance trim) and another look-up table called the "delay map". Below a knock count of 3 the octane value is increased toward its maximum value, leading to less knock delay (more timing advance). If the knock count is above 5 the octane value is decreased toward its minimum value, leading to more knock delay (more timing retard). There is a fixed value in the ECU programming controlling how fast (step size) the octane value is increased or decreased. The octane value is reset to its maximum (no knock delay) when the ECU is reset (power removed for 15 seconds or so). "
From:
http://www.stealth316.com/2-ignitionsystem.htm