[Al Skierkiewicz]

Charlie,
Gray Code is just another kind of binary coding used to generate data from these devices. The three pin device you refer to is the two bit part. The higher resolution part has more pins. The data sheet Jim listed above covers all of the parts in this family and includes the output tables for two bit, gray code and hex encoded outputs. Note how they differ from simple binary coded outputs. It is a little hard to follow but the individual part numbers are listed in the part number finder at the very bottom of the article. If you have a method of decoding gray code (either in a micro of your own design or with code you loaded into the RC) you can get up to sixteen distinct positions per revolution with the four bit varities. Again, these are not meant to be continuous rotational devices. They work great for coarse position selectors or one of several selectors. (i.e. you choose which of 16 preset conditions you want to start with)