The scroll wheel at the front of the mouse is mounted on a switch mechanism that detects both how much it's rotated and whether you've pressed it (it functions like the central button of a conventional mouse). Rotations of the scroll wheel can be detected in a variety of different ways. Some mice use potentiometers (broadly, variable resistors), similar to the volume control on a radio but able to turn around multiple times. Others use various kinds of rotary switches or optical (rotary) encoders to convert analog wheel movements to digital signals.