What it does depends on what it’s intended to do. It may do certain things, it may do all the things.
Options include:
1) Higher RPMs intended to maintain peak output from the engine for longer periods. Transmission shifting will sometimes happen faster, and more frequently.
2) Traction control will sometimes throttle power output while it diverts power away from a slipping wheel. This can be disabled, allowing full power output even if you’re just spinning your tires.
3) The fuel pumps become more responsive. When you hit the gas on an injected engine, there’s a pump spraying fuel in… more pedal means more gas injected. But it doesn’t instantly ramp up, it smooths out that increase. In sport mode, it spends less time smoothing out that increase.
4) ECU can run a different program, allowing a forced air engine to use a more aggressive boost profile, tighter timings, etc.
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