Analysing in cylinder pressure waveform is extremely useful in developing combustion strategies in OEM R&D environments and also for diagnosing lots of issues.
I have taken picture and its explanation from a Snap on product catalogue which I thought was well explained.

A—Ready Position
— Piston has stopped at TDC
— Cylinder contents are compressed
— Both valves are closed
— The spark pulse usually happens 7 to 10 degrees before the peak pressure.
B—Power Position
— Both valves remain closed
— Piston has rapidly resumed movement
— Piston reaches top speed at the halfway point
— Piston quickly decreases in speed and stop at the end of
the stroke
C—Vacuum 1 Position
— Piston has stopped at BDC
— Both valves remain closed
— Cylinder pressure has dissipated, and the rapid downstroke
of the piston has drawn a vacuum in the cylinder
— Exhaust valve is ready to open
D—Exhaust Position
— Exhaust valve has opened
— Piston has rapidly resumed movement
— Piston expels cylinder contents through the open
exhaust valve
— Piston reaches top speed at the halfway point
— Piston quickly decreases in speed and stop at the end of
the stroke
E—Zero Position
— Piston has stopped at TDC
— Exhaust valve has closed
— Intake valve is ready to open
F—Intake Position
— Intake valve has opened
— Piston has rapidly resumed movement
— Down-stroke of the piston draws air into the cylinder
through the open intake valve
— Piston reaches top speed at the halfway point
— Piston quickly decreases in speed and stop at the end of
the stroke
G—Vacuum 2 Position
— Intake valve has closed
— Piston down-stroke has drawn a slight, non-detectable
vacuum in the cylinder. (A closed throttle registers a
detectable vacuum.)
— Piston has stopped at BDC
H—Compression Position
— Both valves are closed
— Piston has rapidly resumed movement
— Cylinder contents are compressed on the piston upstroke
— Piston reaches top speed at the halfway point
— Piston quickly decreases in speed and stop at the end of
the stroke
Now onto the diagnostics. Measuring in cylinder pressure will show up lots of problems if analysed correctly.
- If the piston rings are damaged ( loss of compression will result in lower than normal peak pressure reading).
- If there is restriction in Intake or exhaust and it will show up in C (exhaust) and D (intake) area in the waveform.
- If the head gasket is damaged, the peak pressure will be lower than normal reading.
- Valve timing failure will show up in the readings. If there is an open valve, the compression pressure (A) will be lower and there will not be any vaccuum created in the intake stroke. Camshaft timing problem will have a different compression and vaccuum pressure reading.
In cylinder pressure sensors are useful in finding knocking or detonation accurately.

Detonation is unwanted combustion which happens when hot air pockets with fuel are auto ignited and the yellow pressure curve with jagged ends at the top explains it clearly.But capturing this requires some high speed data acquisition hardware modules which are very expensive, which is why only well funded companies like OEM or F-1 teams have access to such sophisticated piece of equipment.
Cheers,
Vish