I purchased an LDC1000 when it was first released to evaluate it.
It is capable of detecting sub micron distances. That's really impressive!
And can be used for axial distance measurement, linear position measurement and angular position measurement.
It has also won many accolades including EDN Hot 100 (2014), Electronik Active Component Rank #1(2014), EE Times ACE award (2014) and Best Electronic Design (2013)
It affordable with an approximate price of $2.95 in 1k quantities
Like most sensors these days have been made easy to interface with a serial interface and the LDC1000 is no different. The LDC1000 has a SPI interface.
It also has an dedicated Interrupt signal that can be asserted should threshold values be exceeded.
It has a wide I/O voltage range from 1.8 to 5 volts and requires a 5 volt analog power supply.
Being an inductive sensor a sense coil is required. Its response is dependent upon the sensor's target.