An encoder converts mechanical rotation (or linear motion) into electrical signals a controller can read. Without encoders, closed-loop motion control doesn't exist — you'd be guessing where your axis is. Two fundamental types dominate: incremental and absolute.

Incremental encoders output pulses as the shaft turns. A disk with evenly spaced slots passes between an LED and photodetector, producing a square wave. Count the pulses, you know how far you've moved. Two channels (A and B) are offset 90° — this quadrature signal tells you direction: if A leads B, you're turning one way; if B leads A, the other. A third channel (Z, the index) pulses once per revolution as a reference.

The catch: incremental encoders forget. Power cycle the machine, and you've lost your position. You must home the axis by driving to a limit switch or the Z-index pulse to reestablish reference.

Absolute encoders output a unique digital code for every shaft position. Read the value once, you know exactly where you are — no homing needed. Single-turn absolute encoders give position within one revolution (typically 12–17 bits = 4,096 to 131,072 positions). Multi-turn versions add a geared counter or battery-backed memory to track full revolutions, useful on long ballscrews or robot joints.

Output protocols vary: SSI, BiSS, EnDat, and increasingly industrial Ethernet variants. They're more expensive than incremental ($150 vs $30 for comparable resolution), but eliminate homing routines and survive power loss gracefully — critical for collaborative robots, surgical equipment, and any safety-related axis.

Real-world example: A CNC mill's spindle uses an incremental encoder (1,024 PPR — pulses per revolution) — you don't care about absolute spindle angle, just RPM. But the X, Y, and Z axes on a modern machine use absolute encoders so the operator doesn't have to re-home after a power outage in the middle of a $20,000 titanium part.

Resolution calculation: A 1,024-PPR quadrature incremental encoder gives 1,024 × 4 = 4,096 counts per revolution (quadrature decoding counts every edge of both A and B channels). On a 5 mm-pitch ballscrew, that's 5 mm ÷ 4,096 = 1.22 µm per count — fine enough for general machining, marginal for optics work.

Rule of thumb: Use incremental when homing is acceptable and cost matters; use absolute when downtime, safety, or unknown startup position is unacceptable. Multi-turn absolute is mandatory for vertical axes where gravity can drift the load during power-off.