These sensors and switches monitor temperatures. If faulty, they either send signals to the machine's electrical "brain" which can activate a warning light, shut down that part of the system, or shut down the entire engine. Usually, these are located in the cylinder block, oil cooler, or in the cooling system.
Switches are set up per specific temperatures. Some turn on at a specific temp, and some turn off when the area being monitored by the switch reaches that temperature. At that point, the "brain" will activate or deactivate another device, such as a fan.