[DonRotolo]

The short version is that it is a magnetic sensor. Every time a piece of ferrous* metal gets within about 2 millimeters of it, the output changes from a low level (around 0 volts) to a high level (around 5 volts)(AKA 0 and 1 to you digital folks). To every time a gear (or sprocket) tooth passes, you get a pulse, for example. If your sprocket has 24 teeth, you get 24 pulses per revolution.

You just count the pulses, and that tells you the number of rotations. Doesn't tell you the direction. Doesn't help if a wheel is slipping (and that's what you are measuring).

Also, if the wheel speed sensor is from a previous year's Kit of Parts, I would check the rules to see if it it legal to use, since I don't think they are considered COTS items.