We are not big fans of the physical circuit diagrams, but it looks like [Tech Build] borrowed (with credit) ... As an encoder, a stepper motor has nothing absolute. There is no stop, ...

The circuit uses an opamp-based differential amplifier to read the pulses from the coil. Two opamps on two coils produce a quadrature signal just like a normal encoder. When the shaft turns in one ...

The encoder delivers data for display or data that may serve as feedback in a motor-control system. Such information is supplied to a host microcontroller for processing according to the application.