Are there downsides to a talbot imaging based optical encoder?

Yes, there are downsides to a talbot imaging based optical encoder. The talbot image is created by using a reflective diffraction grating, therefore the scale must be kept clean and generally free of debris. In certain applications like CNC, contaminants from the surrounding environment, like oil and grease, could affect the signal of your encoder. Talbot imaging based encoders should be used in relatively clean environments, or should be protected from contaminants. Click for more information on talbot imaging based optical encoders.