Lots on the Web about Passlock 2. If the light comes on while driving your car is not protected by the Passlock system.
There is a Passlock module imbeded in the ignition lock cylinder. When you turn the key a signal is generated by the Hall effect system. A imbeded resistor sends or the BCM reads a signal and the signal must match a stored code or the starter is disabled.
There is also a lot of info how to bypass a malfunctioning system.
Earlier GM systems had this resistor embeded in the key.
Many Passlock 2 failures are from the passlock module (need to replace ignition lock cylinder) and from moisture in connections.
I wish I had a FSM to review this stuff