We call them VRS sensors (variable reluctance sensor). They are commonly used now instead of Hall Effect sensors for crank/cam/wheel speed and position timing. For instance, you can have a maetalic toothed wheel passing the sensor creating a sine wave whose frequency corresponds to the speed of the wheel. If you know how many teeth are on the wheel, you can determine how fast the wheel is turning. If you remove a tooth on the wheel, (called a missing tooth wheel) you will get a gap and a higher signal where the gap occurs. This lets you know when, for instance, you passed TDC. Now you can accurately time you spark and fuel.

__________________
Michael LaFleur

'05 E320 CDI - 86,000 miles
'86 300SDL - 360,000 miles
'85 300SD - 150,000 miles (sold)
'89 190D - 120,000 miles (sold)
'85 300SD - 317,000 miles (sold)
'98 ML320 - 270,000 miles (sold)
'75 300D - 170,000 miles (sold)
'83 Harley Davidson FLTC (Broken again) :-(
'61 Plymouth Valiant - 60k mikes
2004 Papillon (Oliver)
2005 Tzitzu (Griffon)
2009 Welsh Corgi (Buba)