A linear encoder is a sensor, transducer paired with a scale that encodes position. The sensor reads the scale in order to convert the encoded position by a digital readout (DRO). Linear encoder technologies include capacitive, inductive, eddy current, magnetic and optical.

A rotary encoder, also called a shaft encoder, is an electro-mechanical device used to convert the angular position of a shaft to a digital code, making it a sort of a transducer.
Rotary encoders serve as measuring sensors for rotary motion, and for linear motion when used in conjunction with mechanical measuring standards such as lead screws. There are two main types: absolute and relative rotary encoders. Incremental rotary encoder uses a disc attached to a shaft. The disc has several radial lines. An optical switch, such as a photodiode, generates an electric pulse whenever one of the lines passes through its field of view. An electronic control circuit counts the pulses to determine the angle through which the shaft has turned.

As the present trend of machine tools evolves toward increasingly higher accuracy and resolution, increased reliability and speeds, and more efficient working ranges, so too must feedback systems. Currently, linear feedback systems are available that will achieve resolutions in the submicron range.

Submicron resolutions, for example, are required in the semiconductor industry and in ultra-precision machining. Achieving these resolutions is possible with the use of linear scales which transmit displacement information directly to a digital readout. As in rotary, linear scales operate on the same photoelectric scanning principle, but the linear scales are comprised in an overall straight construction, and their output signals are interpolated or digitized differently in a direct manner. One of these signals is always used by the accompanying digital readout or numerical control to determine and establish home position on the linear machine axis in case of a power interruption or for workpiece referencing. Overall, there are two physical versions of a linear scale: exposed or enclosed as shown in the figure 24.3. With an enclosed or "sealed" scale, the scanning unit is mounted on a small carriage guided by ball bearings along the glass scale; the carriage is connected to the machine slide by a backlash-free coupling that compensates for alignment errors between the scale and the machine tool guide ways.

A set of sealing lips protects the scale from contamination. The typical applications for the enclosed linear encoders are primarily machine tools. Exposed linear encoders also consist of a glass scale and scanning unit, but the two components are physically separated. The typical advantages of the non-contact system are easier mounting and higher traversing speeds since no contact or friction between the scanning unit and scale exists. Exposed linear scales can be found in coordinate measuring machines, translation stages, and material handling equipment.

Another version of the scale and scanning unit arrangement is one that uses a metal base rather than glass for the scale. With a metal scale, the line grating is a deposit of highly reflective material such as gold that reflects light back to the scanning unit onto the photovoltaic cells. The advantage of this type of scale is that it can be manufactured in extremely great lengths, up to 30 meters, for larger machines. Glass scales are limited in length, typically three meters. There are several mechanical considerations that need to be understood when discussing linear encoders. It is not a simple matter to select an encoder based just on length or dimensional profile and install the encoder onto a machine. These characteristic considerations include permissible traversing speeds, accuracy and resolution requirements, thermal behaviour and mounting guidelines.