A car's emission system may not seem like an important part of a vehicle, because it typically doesn't tie directly into the performance of the car. However, every driver needs to pass their state's inspection, and a faulty emission system is a good way to fail quickly.
Before emission systems, automobiles were a major source of pollution. Emission systems were designed in order to cut down on the number of pollutants a car spews into the air, and they've done a good job at reducing the damage cars do to the environment. Thus, a driver who doesn't take care of his emissions is ultimately not doing his part to help save the earth. Apart from the moral issues, driving with a bad emission system can result in legal problems as well.
The idea behind controlling a car's emission might take you back to high school chemistry class. Burning oxygen and fuel in a car is a chemical reaction, necessary for propelling the car forward. All reactions have an abstract characteristic known as a stoichiometric point. This is a big word to describe a simple concept - the ideal mixture of the two participants in the reaction. For vehicles, the ideal mixture is 14.7 pounds of air burned for every 1 pound of gasoline. When this mixture is exact, all the air is burned up and nothing is left over.
Yet in practice, this exact point is rarely achieved. Mixtures that are too lean (air-to-fuel ratio higher than 14.7) or too rich (air-to-fuel lower than 14.7) result in other gases forming as "leftovers" of the chemical reaction. Some are not harmful, like nitrogen or water vapor. Others, like carbon monoxide, carbon dioxide and nitrogen oxides, can do damage to the environment. Fortunately, the exhaust system funnels these gases into the catalytic converter.
Those who remember chemistry might know these gases can be changed through chemical reactions. For example, nitrogen oxide (NO2) without the nitrogen is just O2, or oxygen. Thus, the catalytic converter isn't mechanical at all - it's chemical. This part of the car contains metals like platinum or rhodium to essentially rip the nitrogen away from the oxygen. This is known as the reduction catalyst.
Some of the other harmful gases are handled by the oxidation catalyst. This part of the converter uses platinum and palladium to burn the gases, effectively neutralizing them. The presence of these precious metals, plus the ceramic coating in the converter that makes it heat-resistant, are what makes catalytic converters expensive to replace.
Another important part of this system is the oxygen sensor. The sensor isn't quite part of the emission system, but works closely with it. The oxygen sensor's job is to keep the air-to-fuel ratio at the stoichiometric point so everything burns nicely. It does this by detecting how much oxygen is left over in the catalytic converter - by using this information, it can adjust the amount of air and fuel going into the engine. Thus a car with a faulty oxygen sensor may have greater emissions than normal, and might burn more fuel as well. Drivers who are proactive about their oxygen sensor can nip this problem in the bud before it starts costing them money by replacing it before its broken.
While the catalytic converter goes a long way toward helping emissions, it isn't quite perfect. For example, temperature can throw off the system. Starting the engine on a cold day means that the vehicle actually needs a richer fuel mixture than normal, and the reactions in the converter may not be effective until the engine heats up. In addition, since the system is chemical, and not mechanical, some harmful gas still escapes the vehicle through the tailpipe. This is why even though these systems have help reduce automobiles' impact on the environment, they haven't eliminated them.