This was discovered by studying two people who can't feel pain, but who nonetheless have normal lives.
It may explain what's going on with the author of Waking, who was paralyzed from the chest down in a car accident, but who became fascinated by yoga and eventually became a yoga teacher. He never recovered movement or full sensation, but he felt a sort of ghost awareness of his lower body which was quite useful for him.
The discovery of a second sensory system in the skin relates to why I'm dubious about uploading my mind into a computer. Aside from that we're not even close to the technology, I place a high value on the texture of my experience, and I don't trust the sort of people who are interested in uploading to aim for high fidelity.
I'd seen the link on reddit, but thanks for ookpik for reminding me about it.