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Not an expert, but basically Octane is a measure of how quickly it burns (bang vs. shsssss). Anything that slows down that process has been added- lead, alcohol, etc...
The higher the octane the slower and usually more stabile it burns and the least likely it'll blow a big hole in the side of the engine block when you've advanced the timing too far by accident, it's 110deg outside, and you're stomping on it while lugging a big trailer up a hill.
Modern cars with knock sensors will safely advance the timing until they sense knock and thus will get more "power" out of higher octane.
Low compression engines in cold weather are much more immune to detonation and don't need high octane (as Curt mentioned).
Low octane gas has more energy(BTUs), but it's harder to turn into turning force(torque).
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Meanwhile other things are still happening.
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