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Coolant (then it is the coolant temprature)
Oil (then it is the oil temprature)
Engine Block (then it is the block temprature)
If there is ideal heat transfer then when every thing is working fine the temprature of all the three is the same.
Suppose it is the coolant temprature and if you loose enough coolant that sensor is no longer touching it then you read fumes temprature. Vapors being poor thermal conductor then you block or oil temprature would be higher.
Assumption: the sesnor is some what thermally isolated from its casing (where it threads into the block).
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I don't know exactly where in the RX300 it is. I usually find out such things when I encounter an issue.
However, when my uncle and I work on other vehicles usually it is a resistor or wire of some sort in the engine coolant stream.
Well, when I did my Coolant DIY, it took a good long while before that temp. guage started to rise. Most of the coolant was already about by then, as I recalled it was draining hard for several more seconds and then just lightly dripping. Thus your assumptions are probably correct on placement.