Theory Of Operation
WARNING: This page is about a different car, the 2009 Jeep Grand Cherokee. However, it is still accessible from the selected car via links, so may be relevant.
The Transmission Control Module (TCM) constantly calculates the transmission ratio based on the input speed sensor 1 and 2 (N2-N3) signals and the calculated output shaft speed. The intent of this diagnostic is to detect if the transmission is slipping or an invalid gear ratio is present.