An encoder is a sensor on, say a motor (also known as a shaft encoder) that allows the position and/or velocity to be sensed. A form of feedback.

An encoder is essential if you want to control a motor. In the control theory sense.

They work in a variety of different ways, some sensing tiny magnets spinning by with Hall Effect sensors, some detecting slots in a disc as they pass through a break-beam sensor (an infrared emitter and detector on opposite sides of a channel), some just simple, cheap, and inaccurate potentiometers.

But how do you tell direction? Well that's beyond the scope of this course, but you'd need something like a quadrature encoder.