Ok, found a
manual.
Doesn't say where the temp sensor is (doesn't even have a board schematic!

), but as it has a CPU fan header, would presume it's under the CPU (ie inside the Socket).
So, in answer to your original question, I'd surmise the temp is for the CPU. And 32C is fine for a Cyrix 686 IMO.
Hope this helps
Mick