You count pulses from the encoder. How many pulses = 1 meter is determined by how the encoder reads the distance.
For instance, if you the encoder is attached to a measuring wheel with a 1 meter circumference, you will get 360 pulses for each 1 meter of movement. If the measuring wheel is 0.5 meter in circumference, you will get 720 pulses (2 revolutions) for each 1 meter of movement.
beerchug
-Eric