It is the sensor that plugs in (actually screws in) to the front of the thermostat housing. It is what actually measures the temperature of the coolant and sends the information to your gauge on the dashboard. When it is shot all kinds of wrong temperature readings are seen on the dash. Many people routinely replace it when they do a thermostat change, although it isn't always necessary. However, in your specific case, it probably is, as if this sensor is reading a high temp, it will keep your fan on even when ignition is switched off (power from your battery and eroneous information from the ECT). Good luck.
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1998 S70 T5 Emarald Green Metallic, 2004 V70 2.5T Ruby Red, Previous Owner of Black '94 850 Turbo Wagon. My cars have been running so well lately they've got me worried.