The computer has to know what position the rotor inside the motor/generator is at so it can properly cycle electricity to the next set of windings, to keep the motor going.

From what I read about a dissected Insight inverter/IMA pack, Honda does not truly invert the DC from the battery into AC before it hits the armature windings on the motor, and they don't use brushes like most DC motors. Instead, they create a rotating magnetic field by switching full DC voltage onto to the "next" set of armature windings in the rotational direction, pushing/pulling the rotor around (the rotor has permanent magnets on it). Therefore the controller must know at all times where the rotor is 'pointed.' I suspect that is what needed calibration.

But that is a cool name for a BS-sounding way to appear important. Sort of like replacing the flux capacitor inside the logarithmic enclosure.