The pickup coil sends a signal to the module 90 crankshaft degrees advanced. The module recalculates the pickup coil signal--retarding it so that the spark occurs at a reasonable time when the crankshaft RPM is below 400. This gets the engine running. Above 400 rpm, the module sends the 90 degree advanced signal to the computer, which electronically delays the spark signal back to the module according to it's programming--a full 90 degrees delay so it arrives at TDC-Compression when the set timing connector is unplugged, or somewhat less than 90 degrees of delay (resulting in varying amounts of spark advance) depending on RPM, load, etc.
Example:
If the pickup coil signal is generated 90 degrees advanced, then the computer delays that signal to the module by 60 degrees, the actual ignition timing would be 30 degrees advanced by the time the spark hits the spark plug.
The knock sensor system can modify (override the normal computer-generated spark advance) the spark signal even more, which retards the spark at the spark plug even more, to combat detonation.
So, yeah...Pure Fookin' Magic: PFM.