Switching into a sports/track/race mode on a car adjusts certain aspects of the car, mainly throttle pedal response, suspension stiffness, gearbox behaviour and steering heaviness.
What this can do is add more drivability to the car. You can make finer adjustments to the pedal as it is more responsive, the suspension may become stiffer for improved handling at the expense of comfort, if you drive an automatic the gearbox may shift into the next gear at a higher RPM or shift faster, and the steering will become stiffer/heavier for finer adjustments to direction.
In terms of how it actually works in my experience with Volkswagen Audi Group ECUs, they have multiple chunks of data, or tables, that represent each part of the cars function but each being slightly different depending on situation/condition. It might have 4 tables for fueling, 3 tables for the throttle, 4 for gearbox and 2 for steering. What the ECU will do when it enters a sport/race/performance mode is switch between the tables for each function depending on what mode, so one mode may be for ‘comfort’ setting and another for a performance setting.
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