Linear encoders consist of precision ball bearings contained in a tube.  This tube passes through a set of inductive coils that takes advantage of the regularity and uniformity of ball bearings to create a series of sinusoidal signatures.  Using a proprietary algorithm, micron-level resolution and repeatability can be obtained.  This is perfect for metal fabrication environments, which are subject to metallic debris and cutting fluids which make glass scale approaches very problematic and expensive to install and maintain.  What's more, the sensing elements can all be well sealed to at least an IP67 level for longevity and reliability in the harshest environments.