This is a continuous rotation rotary encoder, there are 20 detents per rotation, the shaft also acts as a push switch.
The three pins are A, Common, B and the two pins are for the switch.
What is a rotary encoder? Well they look like a potentiometer, but instead of dividing voltages (or variable resistance), they are effectively a digital device which can tell your micro controller when it is turned, and in which direction, your program can keep track of this to know how much it was turned (if it needs to).
Volume controls on your modern car stereo are most likely a rotary encoder for example - they control not just the volume, but also selecting functions etc. The push button can for example be used to switch modes, to change what the rotation controls, regardless of where it is presently rotated "to".
You can very easily hook it up to your ardiuno, pic or other micro controller according to tutorials you can find on the web, for example: playground.arduino.cc
Specifications:
* Rotary Shaft Length: Approx. 12mm
* Shaft Full Length: Approx. 20mm
* Shaft Diameter: Approx. 6mm
* Size (L x W): Approx. 15 x 11mm
* Output: 2-bit gray code
* Closed Circuit Resistance: 3 ohms maximums
* Max. Rating: 10 mA @ 5 VDC
* Operating Temperature Range: -30 to 70 degrees celsius
* Storage Temperature Range: -40 to 85 degrees celsius
* Rotational Life: 30000 cycles minimum
* Switch Life: 20000 cycles minimum
