The calibration offset is quite simple to understand.
As you say, the sensor is right beside the radiator so will tend to read higher than the true room temperature due to the proximity of the heat from the radiator. Convective airflow past the radiator will counteract this to some degree by drawing cool air from along the floor past the sensor but typically the sensed temperature will still be at least 1C hotter than actual room temperature.
So if you set the set point to 20C your room would only end up at a true temperature of 19C as measured by an independent thermostat.
Calibrate applies an offset to the temperature sensed by the HR92 before it is sent back to the controller and before it is used to decide whether the room is too hot or too cold.
So if set to -1C and it senses 21C it will be reported at 20C. This affects both displayed temperature as well as affecting the temperature that the room eventually settles on. So a negative calibrate setting will cause the actual room temperature to be hotter, as measured by an independent thermostat.
-1C is typical for many radiators/rooms, but in one of my rooms I need -2C in summer and -3C in winter because convection is poor in that room and the radiator is a bit undersized.
If you need more than -1C for calibrate for a given room the room may be better off with a remotely situated wall thermostat instead, and one day I will get around to fitting one in that particular room. (I already have a wall mounted DTS92 in the living room and both bedrooms)
Calibration doesn't introduce any deadband so you don't need to worry about that. It's purely a numeric offset to the sensed temperature before it is used by the system.