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Absolute encoders contain multiple detectors and up to 20 tracks of segment patterns. For each encoder position, there is a different binary output -- shaft position is absolutely determined.
Commercial shaft encoders use magnets and Hall-effect sensors, or optical sensors and encoder discs. But these can be quite expensive, so [Hello1024] hacked together an alternative in an afternoon.
If you have a brushless motor, you have some magnets, a bunch of coils arranged in a circle, and theoretically, all the parts you need to build a rotary encoder. A lot of people have used brushless… ...
In devices which use rotary knobs, the AS5601 and its paired magnet may replace a rotary encoder without any change to the host microcontroller or its application software.