What does an oxygen sensor do in a 2002 Dodge Caravan Se

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O2 sensors are mounted in the exhaust from the manifold back, and before and after the catalytic converters. They tell the engine's computer how to mix the air/fuel mixture, to prevent running rich or lean, and for optimal emission levels. They can and do go bad, which affects engine performance. When you get a code or codes related to an O2 sensor, and the problem is not seen to be elsewhere (like a cracked manifold, plugged cat, misfiring injector, etc.) then one of the easier remedies is to replace that sensor. You can actually test the sensor, but as that requires removing it, it's just easier (and cheaper) to go ahead and replace it, most of the cost is in the labor to get to it or remove it. The real fun happens when you've replaced the sensor and still have the O2 code, then you have to hunt for the real problem which can be any number of things and often far more expensive.