This is an incremental rotary encoder with a push button. It includes a plastic knob. Pressing on the knob activates a momentary switch. Rotating the knob creates the gray code signals at the outputs A, B, and C that allow you to determine the direction of the rotation as well as how far it has been turned.
These encoders are great for selecting among various possibilities. For example, they are often used to navigate through a multilevel menu. Rotating the knob moves you up and down a list of menu items, and pressing the knob selects the item and moves you one level lower in the menu.
