This way the microcontroller is concerned with the encoder signal only when a new pulse comes. Since the interrupt signal comes from outside the Arduino it is called as external interrupt. Arduino Uno ...

It is amazing how many Arduino programmes for decoding rotary encoders start with something like: "I looked at all the available rotary encoder sketches. About Us; Contact Us; ... and another ...

The encoder we had was on a little PCB that you get when you buy one of those Chinese Arduino 37 sensor kits. (By the way, if you are looking for documentation on those kinds of boards, look here ...