The circuit may be understood through the following explanation:
IC2 TL074 is a quad op amp IC and becomes the heart of the circuit. Three of its op amps have been used in the circuit in three different important configurations.
Referring to the figure, we see a constant reference voltage at the non inverting input #3 of A1, which is wired as a voltage follower and buffer. This reference is derived through the potential divider R1/R2.
The buffered reference voltage continues from the output of A1 to the inverting input #6 of A2, which is basically configured as a comparator.
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The voltage at the non inverting input pin #5 of A2 is held at a constant level with the help of resistors R6, R7 and preset P1. This also means that the current through R5 and hence the diode D1 (sensor) is also constant. Any variation of voltage across D1 will be compared and translated into an amplified response by A2 at its output.
As explained earlier, any change in the ambient temperature surrounding D1 will cause an equivalent change in voltage across it. Consequently, this will also result in a change in voltage level across R5, which in turn will be amplified by A2 at its pin #7.
This output voltage at pin #7 will be exactly proportional to the temperature variations sensed by D1.
The third op amp A3 is also rigged as a voltage amplifier and further amplifies the output from A2. Its non inverting input is also kept at a constant voltage level (just like A2).
Before this voltage reaches pin # 12 of A3, it is properly calibrated so that a zero degree Celsius ambient temperature produces exactly zero volts at the output of A3 and goes on increasing proportionately up to its maximum range (100 degree Celsius).
To make the circuit read temperatures below zero degrees Celsius, a symmetrical supply voltage to the circuit is necessary. The special configuration of A1 along with R1, R2 and IC1 plays an important role in enabling this.
In the above configuration, output of A1 creates a constant positive reference voltage relative to the negative supply line and acts as a ground (zero potential) for the remaining part of the circuit. The supply to the whole circuit thus becomes quite symmetrical.