A DC reference voltage is applied across the two outer fixed connections forming the resistive element. The output voltage signal is taken from the wiper terminal of the sliding contact as shown below.
This configuration produces a potential or voltage divider type circuit output which is proportional to the shaft position. Then for example, if you apply a voltage of say 10v across the resistive element of the potentiometer the maximum output voltage would be equal to the supply voltage at 10 volts, with the minimum output voltage equal to 0 volts. Then the potentiometer wiper will vary the output signal from 0 to 10 volts, with 5 volts indicating that the wiper or slider is at its half-way or centre position.