here is a link to what may be THE knock control system. Among other scenarios the spark plug is charged (becomes a sensor)and informs a computer of what has happened in that cylinder, the computer then advances, retards or maintains timing.
So you have an instant reading of what has happened in a cylinder after ignition. It can interpet knock and misfire. If your water injection had failed the plug would inform the ignition circuit if the cylinder had detonation.
this is one result of a search for " ion sensing ignition systems"
http://www.fs.isy.liu.se/~larer/Projects/main.html