Among non-contact position sensing methods used in mechanics laboratories, high speed cameras plus image processing is fairly common. However, this method is resource intensive, and a less expensive method is presented as a demo.

The TCD1304AP is a 3648 element optical array available in a DIP package.
It's basically 3648 photosensors aligned in a straight line, and each has a storage capacitor.
In order to acquire data, the user first sends a pulse that connects each sensor with its capacitor for a fixed duration ( the equivalent of shutters in cameras).

Once the shutter closes, the voltage on each sensor's capacitor represents the amount of light it received.
A series of pulses must then be supplied by the host, and upon receipt of each pulse the TCD1304 connects the capacitors one by one to its analog output pin. The host must simultaneously read and digitize the output analog data with its ADC.