You can run without it, and a few have said that they saw gains (the highest I saw was 8 RWHP) but as far as exactly what it does you got me...
I BELIEVE it keeps track of the either the amount of air entering or the temperature and then accordingly changes the amount of fuel being put into the engine
The IAT sensor is there to detect the temp of the air entering the engine from the intake. The signal sent from the sensor tells the computer what timing and amount of fuel the engine needs according to the air temp itself.
It is NOT the only sensor that controls the fuel and timing, there are many others sensors, these also include the O2 sensors, MAP (manifold air pressure) sensor and many other sensors and parameters to ensure the engine works properly.
One trick is to place a resistor in line with the sensor to trick the engine to think it is colder outside, then it will change the fuel and timing, not by much and therefore the changes are not dramatic and our computers adapt them selves and readjust.
If you disconnect the sensor or add to much resistance you will end up with a code and check engine light, I have played with this and other sensors and the car ran best by leaving it as it came.
You should know that the car responds to how fast you press the throttle, not just how far. Faster press should get you a quicker response. Jab the throttle, and she'll lunge, slowly press down, she'll gently ease up to where you want.
I took it off when I dynoe'd and my HP jumped up 8hp. At the track I shaved about .2 off my time but I also deactivated the ESP via the stock button on the dash.
I wouldn't drive around with it out but a good thing to do would be to extend it as close to the filter as possible so that it gets the coolest air possible.
I believe you will throw a code if you leave the IAT out. It codes for high or low, either shorted or dead. Some have resistors in the wiring and swear by it. I looked at one that had a resistor with my starscan and it was running at like 75 degrees. I think buying the extension and putting a resistor in it is the best approach. This way you can take the extension out when you wish and have normal operation, and put the extension in with the resistor for running at say the track.
I didn't throw a code but I didn't run the engine for very long either. Just enough to stage and run the quarter twice. I didn't unplug the sensor from the harness, just left it taped to the side and plugged the opening on the intake with tape.
One would think, yes. I disconnected my sensor and recorded the data with my Superchips. MadC and I came to the conclusion based on our data that the timing does not advance with the IAT disconnected, even though the default IAT is -40. Seeing that the timing curves were very similar in both of my runs, this "mod" seems to be useless. The degree of advance was identical with air temperature readings of -40 and 86 degrees.
These were the results that I got...on my Superchips. I'm not sure that it will make a difference at the track but I could try that too next time I'm there!