I suppose only Lavos could tell you for sure which senses it used, if it had ever thought to consider that or analyze it at all. I've 'seen' several ways that things that don't exist by societal standards have shown me in my minds eye, but each things walk in existence is its own and unique and while things are similar, how they play out is different due to the world, the 'laws' that govern it and how the 'magic' of reality works beyond our fantasy notions of magic.
I would say that it is obvious that Lavos does watch. When you fight the Final Battle with it down under all of its armor, it flashes through time periods during the fight, a form of illusion painting the picture. Perhaps along with illusions and others means, it also relies on senses we, as humans, rely on beyond sight, hearing, etc. Without going too much in detail, it IS a creature caught, but not stuck, in a time loop where he transcends all time periods just because he is in one, like the Black Omen. Otherwise, you could kill him in the future and still go back in time, era by era, and kill him over and over.
That, in itself has him existing within his own form of 'black hole', but not what we view as a black hole or any form of wormhole. It shows when you face him a couple ways that he is just resting in a cave, not a space all its own, but under the shell exists an air that could have its own time bubble, much like the End of Time, but still different all the same. And then, There's Lavos itself having all that time in that time loop to learn how to use abilities beyond fighting to pierce the universal mind and learn from countless things like The Matrix. It's even possible for it to have 'samples' of cell tissue and particles from every living thing to be brought to it through wormholes, causing no actual damage to anything. Not osmosis, but an actual manipulating of reality to bring the matter to him and into himself.
Now, let's say that this is actually possible for some beings and see if you can extend beyond the barrier of disbelief. Already between Trigger and Cross, Lavos learns both of Time and Alternate realities and the co-relations between them, perhaps sees and experiences more than the limited game engines could fully bring out. In a vast omnireality with near-infinite amount of alternate realities for almost every decision, eventually securing a strong linear time line that can no longer be altered through time travel at all, because it has already been altered in ever conceivable manner. But, for a being going through it's linearity, like Lavos, it would be like entering past an event horizon and not seeing the inevitability of what the future forces the past to meet as it fulfills whatever purpose is fulfilled by its analyzing of time and space as it did and must then be given an exit, a beautiful death. Until it hit the point of Chrono killing it, it would not have been able to conceive of being able to be defeated by them, for the same reason that Sephiroth lost to Cloud even with Clouds lack of skill and ability to be on the level of a God, how when destiny and fate intertwine with free will, combatants are forced to meet in a middleground realm of 'fair fight' where they are simultaneously brought to a middle level between each, one a downward slipping towards the death they often wanted and the other an uphill battle into rising to their destiny to become the best fighter in their world.
Otherwise, with Sephiroth being able to keep them all immobile in the air would have proven for it to be impossible for them to actually kill him in a matching of skill; Lavos has to be the same. The choice to fight, the choice to enter into battle in terms of 'to the death'. Not just for the life of the planet, but for the sheer force of the warriors blood rising in them all and wanting to put it to the test, wanting to 'feel', to be 'alive', if only for a moment before their final death. The fact is that this can be evidenced in a lot of our different stories, so has an actual credibility to the concept. It is literally how Goku in Dragon Ball Z met all of his enemies head on, no matter how stronger than him they were and beat them all one way or the other even if he had to put a bad dog down. Literally how every RPG is and how life itself is as we enter into it, culture-shocked from birth and rushing through it without knowing, knowing and blind until we find our feet in it here and there only to be caught unawares by another part of 'life'.
and, as we absorb information and data from everything we encounter, even in the mind and spirit, so, too, would have to be assumed of Lavos and every other living entity.
