How does the iPod click wheel work?

Disclaimer: It 'seems like it should be a popular question (probably already answered here before) but I see no search link, nor does search.php work, so here goes:

How does the click wheel work on a iPod (I’m referring to the new generation but I suppose the same principle would work on the older models too)? I just bought one and the ability to flip through menus with only an incredibly light glide in a circular motion around the wheel is probably the most amazing part about the iPod. How does it detect the motion of your finger?

iPod’s new trackpad: How do they do that?

Something called “coupling capacitance” apparently. Same way a trackpad on a laptop works.