A bypass valve (BPV, also known as a diverter valve) is very similar to a blow-off valve (BOV). Both relieve pressure inside the intake pipes when the throttle is quickly released to avoid compressor surge (in simplest form, air going back out the turbo inlet). The difference between the two is that a diverter or bypass valve redirects the air back into the intake pipe before the turbo whereas the blow-off valve simply vents the air to the atmosphere. Typically, bypass valves are used in MAF-equiped cars as most times the MAF is placed before the turbo. If a BOV were used with this setup it would be venting air that has already been read by the MAF and the proper amount of fuel has been added by the ECU. This causes an overly rich condition during shifts which can lead to stalling. BPVs alleviate this problem by recirculating the pressurized air into the intake pipe before the turbo but after the MAF so no air is lost. To run a BOV without stalling people traditionally use one of two methods. The first, called the dual-method consists of leaving the MAF in the stock location and running either the stock or an aftermarket BPV in the stock location while also running a BOV on the cold side (post-intercooler) piping. The other method, which I personally am using is referred to as relocating the MAF. As it's name implies this consists of placing the MAF on the cold side of the piping and placing the BOV some distance in front of it (upstream). People quote conventions as to how far the MAF needs to be away from the throttle body or how far the BOV needs to be from the MAF but in actuality, as long as they aren't right on top of each other everything will be fine. My BOV is about 6 inches in front of my MAF and the MAF is maybe 8 inches in front of the throttle body.
