Torque350, ECU is like a computer which controls the various aspects of the car. As its a computer, it can only understand current, resistance etc. So a car has sensors connected to different parts like the intake manifold, exhaust, crankshaft, camshaft, cylinder wall etc. These sensors sense the different physical parameters like temperature, pressure etc and convert the same accordingly into a certain resistance or voltage. This signal is sent to the ECM, which understands the different physical paramaters as per the data stored in it initially and sends the signal to the actuator. Actuator functions according to the command of the ECU.
The main reason ECU was introduced was to control the pollution. It was later on that ECU was used for other purposes like cruise control, ABS, etc.
ECU's wires are connected to the various different parts of a car, the main primary ones are:
Intake Air Temperature Sensor (Intake Manifold for temperature)
Manifold Absolute Pressure Sensor (Intake manifold again for pressure)
RPM Sensor (Crankshaft)
Oxygen (Lambda)Sensor (Exhaust)
Camshaft Sensor (To sense Camshaft's position)
Knock sensor ( To sense any knocking in the engine)
Throttle Body Position sensor (At the throttle)
Engine Temperature Sensor (On the Cylinder Wall)
Your 3rd & 4th question's answer:
ECU runs on a software. Keeping mileage in mind and pollution under control, ECU's are programmed for more mileage and less performance. a tuning box is tuned for more performance which reduces the mileage. Manufacturers don't leakout the codes of their ECU softwares, so a tuning box is added which kind of controls the ECU and commands it to work accordingly. (i.e for more performance)
@Krishna
I'm fail to understand what exactly do you want?
I tried this and I had understeer, I tried that and I had oversteer, at the end of the corner I just ran out of talent!