What is refractive index and why it is important

In optics, the refractive index (or refraction index) of an optical medium is a dimensionless number that gives an indication of the light bending ability of that medium.

You can see refraction happening as a ray of light bends through a slab of glass. 

The refractive index determines how much the path of light is bent when entering a medium.
Every medium has its own refractive index value.

For example, vacuum has a refractive index of 1.
Clean air has a refractive index 1.00003.

Water has a refractive index of 1.333.

Crown glass has a refractive index of 1.52.

An extensive list of refractive indexes of various mediums can be found at https://refractiveindex.info/

Looking at optical sensors, the refractive index becomes relevant when having another medium other than just air in the optical path of the sensor.

For example, when measuring with a distance / displacement sensor through a glass plate or even the glass thickness, you typically have two different mediums that the laser or confocal light path must pass through - air and glass.

And especially for high precision applications that are solved with displacement sensors, even a very small deviation caused by refraction is relevant because it can affect the optical path angle and length and therefore the perceived position of material surfaces. 

Case 1: Measuring the thickness of glass with a triangulation based displacement sensor

If a laser displacement sensor is used, this will rely on the returned light beam hitting a particular position on a receiver element to measure distance. A material with a different refractive index to air will result in the laser beam returning to a different position on the receiver. The refractive index is crucial to the sensor calculating how much to compensate for the change in perceived position.

Case 2: Measuring the thickness of glass with a confocal sensor
If a confocal displacement sensor is used, this will rely on a particular light wavelength returning to the spectrometer to measure distance. Thanks to a property known as dispersion, different light wavelengths are refracted at different angles. The refractive index is crucial to the sensor calculating how much to compensate for the change in received wavelength.