The oil pressure sensor itself is located on the engine block, near the oil filter. Its reading helps the PCM estimate oil level, although not directly. Low oil pressure is often an *indication* of low oil level, but not a direct measurement.
If you're having issues with oil level readings, you'll likely need to consult a repair manual or a mechanic to diagnose the problem. It could be a faulty oil pressure sensor, a wiring issue, or a problem within the PCM itself.