If you have ever installed one of these bike computers, you know that you have to program them with the circumference of the wheel. The circumference is the distance traveled when the wheel makes one full revolution. Each time the computer senses a pulse, it adds another wheel circumference to the total distance and updates the digital display. Many modern cars use a system like this, too. Instead of a magnetic pickup on a wheel, they use a toothed wheel mounted to the output of the transmission and a magnetic sensor that counts the pulses as each tooth of the wheel goes by.
Some cars use a slotted wheel and an optical pickup, like a computer mouse does.
Just like on the bicycle, the computer in the car knows how much distance the car travels with each pulse, and uses this to update the odometer reading. One of the most interesting things about car odometers is how the information is transmitted to the dashboard. The car is like a local area network with many different devices connected to it. The engine control unit counts all of the pulses and keeps track of the overall distance traveled by the car. This value can be read using a diagnostic computer, which all car-dealership service departments have.