During Initialization the ECU learns:
The sensor values and ranges. All sensors are different, for example the three map sensors, front cyl, rear cyl and atmos, all have different voltages for the same reading. Before the engine is started, they are all reading the same values (atmos pressure), but putting out different voltages. This delta is saved. If you swap these sensors with out doing a reset, the engine tuning will change and may not be correct. This is for the very tight emissions.
The TPS sensor changes depending a little on temperature. The idle position of the throttle plates change as the engine breaks in, so the voltage is different. During the 15 min idle 'Initialization' the voltage of the TPS at idle speed is kept.
The home altitude of the bike determines some of these values also. Since KTM can't predict where the bikes are going, they are shipped with the ECU in the 'reset' condition. The KTM tech has to start up each new bike and let is idle to initialize it. If you ship your bike from sea level to a mountain city, it may not run very well for a while. If you reset it and initialize it, then it will run 'good' right away. I guess that's the whole idea behind this.
The ECU writes out this info as the bike runs. The old 07-08 ECU will write every 15 min or so. The new 09-up will write out more often, I've heard every 9 min. If you ride the bike from sea level to the mountains, it will write enough to keep it running good the entire way.
The O2 sensors read the mixture created under cruse and idle. If they are turned off, then the ECU throws a mixture 'down the hole' and hopefully it is correct. If they are turned on, then it will get some feed back and correct it. The voltage signal for an O2 sensor (narrow band) is essentially high or low, on or off. I don't know if any values for it are kept during initialization.
When KTM was selling Akcro exhausts and providing maps for it, we were supposed to initialize it after install. This map has the O2 sensors off.
With TuneECU available, I can't think of a reason to have the O2 sensors off. Maybe for a full track bike that never idles or cruses. But any street ridden bike it doesn't make sense (or cents).
"Dad, can I get a motorcycle when I grow up?"
"Son, you can't do both"