The EGR system allows some of the exhaust gasses back into the inlet manifold to use the unburrnt fuel vapour to be re-used so making the exhaust emmisions lower, unfortunately as the valve is in the sooty exhaust it gets blocked up with carbon deposits and this will be registered in the engines ECU as a fault, and hence the engine going into limp home mode, you can normally remove the valve and give it a good cleaning with a spray carb cleaner to sort the problem
nigel, July 2011