Some great logical answers here. Thank you for your input!
With regards to thermal paste, I always thought that there was no point to it. Copper is one of the best heat transferrers for its price and it has also been proven that rough surfaces are better than smooth for conducting heat. I suppose the argument is that if you have a paste there are less contact gaps between the surfaces as the paste is semi-liquid (more contact = more heat transference).
The best thermal pastes are copper-based, I would assume.
The thermal sensors though... It does beg the question - why put four thermal sensors in such close proximity to each other on a CPU/motherboard if there is quite a large tolerance allowed? Why not just have one? In case one fails perhaps? Never known this to be the case for a CPU!
I guess the only answer to heat dissipation is to use as large a heatsink as you can fit in your case and make sure you use the best conductive material you can get your hands on.
A lot of wrong assumptions.
Paste or pad is needed to fill up microscopic imperfections on the surfaces which don't allow full contact. If you look at best polished mirror like surface under microscope, you would see mountains and valleys which disallow full contact. Paste may be an insulator but it's lousy at the job and transfer more heat than air trapped in between would,
Copper is not best heat transfer material, it's Silver but more expensive although there were some pastes with it.
Paste is constituted from some kind of grease (now mostly special high temp silicone) but what really transfers heat is microscopic particles of metal or in latest pastes special ceramic particles which transfer heat even better than metal and can also be smaller which allows for more of them and also to fill up smaller pits.
Temperature sensors are many, more than can be seen, in modern CPUs even for every core. They are used internally in CPU microcode to regulate core's behavior according to it's temperatures. Chipset, VRM ,GPUs have own sensors for same reasons.