The "sensor" is a solenoid operated pump that squirts fuel into the catalytic converter. Why? Some theoretical calculation showed that the cat could cool down and become less effective. The raw fuel in the cat would burn and raise the cat's temperature back up to an effective level.
In practice the fuel was squirted into the cat at too low a temperature to burn. The raw fuel could create large black clouds under certain conditions. Talk about embarrasing! The intent was to reduce emissions, the result was an unbelievable increase in emissions.
The cat injector was left off the 1997 Passat. There is a VW service program (not a recall) to delete the operation of the injector from the 1996. Your's may have been done already.
There is also a low cost, at home, means of defeating the injector if the service work hasn't been done to yours yet.
Use the search feature located under the ad for the plate frame at the top of this page. Use "fifth injector" as the search phrase to get so much more information than you'd ever want.