In its stock configuration, an OBD1 car has a diagnostic connector under the dash which is wired to the ECU's serial port. The ECU's serial port is also wired to CN2. This diagnostic connector works in half-duplex, meaning there is only one wire which is used for receiving and transmitting by both the diagnostic tool and the ECU, and thus only one device can transmit at once.

J12, when removed, disconnects the receive line from the transmit line, so the serial port can work in full-duplex mode, meaning both devices can send to one another simultaneously through CN2. This, of course, breaks the stock diagnostic connector under the dash. However, the benefit of full-duplex mode is more reliable Data Logging. Some programming work is in progress to take advantage of this to log data at a much higher sample rate without clobbering any commands sent to the ECU.

On a JDM P30 (Small Sqaure) ECU it is the J4.

picture of OBD1 J12: (12/4/03 - Lego Z?)