What damage can it do? It can destroy an engine by overfueling or underfueling.
This applies to both the sensors.
Are the faults relayed? Possibly, if there's a problem with the wiring or the 5 volt power supply (which means a defective ecu). But then I would also expect errors on the Intake air temperature and Throttle position.
Errors are generated when the signal is below 0,05Volt or above 4,95Volt - this also applies to both sensors.