What does octane do?

Answer 1

Octane rating of fuel is the quality rating the resistance of a fuel to self combust at, IE dieseling.

There are three octane rating systems. The first two rate the quality of the fuel at different temperatures and the third, the one we use in the United States of America, uses the average of the two. The systems are rated starting at 0 and are theoretically limitless, with 100 being the hydrocarbon compound Octanes resistance to self combustion. As such, a compound like nitro-glycerin would be rated very low, possibly in the single digits, while a substance like, say bunker oil, would be incredibly high as it must be both highly compressed and super heated before it could combust.

The reason why high performance engines need high octane fuel is that they use a high compression ratio to create higher horsepower and torque, and using low octane fuel would cause premature combustion of the fuel air mixture, some times called knocking.

Wikipedia has a great article on the octane rating system that you should check out for more information.