KR stands for Knock Retard. What it means is when the computer senses a predetonation of the combustion mixture BEFORE the spark plug fires, it will pull the timing by 'retarding' it to prevent it on the next fire. That way the plug fires before the detonation would occur on it'* own.
This is usually caused by heat or a hotspot in the cylinder causing the combustion to go off before the spark plug sets it off.
Timing advance is when the plug fires before the piston reaches TDC *top dead center* on it'* stroke. By doing this, maximum power can be achieved so that the flame wave hits the piston JUST after TDC so it'* down stroke is more powerful.
The more timing that is retarded by knock, the less power you make, hence the reason why you never want to have it, even in my case 3 degrees of retard can cause a good amount of loss in power.
Cold air intakes help as the air coming in is cooler and doesn't get as hot as it reaches the cylinder. The air coming out of the blower after compression usually hits near 200+degrees in temperature. A thermostat helps by lowering the temperature of the block, helping to prevent detonation via heat.
Hope this makes SOME kind of sense