Thank you for the hint. I think I am starting to understand and will manage to make it work if I put my mind to it. I might have some questions, but I watched some tutorials about connecting encoders to an Arduino:

https://www.youtube.com/watch?v=HQuLZHsGZdI

which had somewhat different wiring from:

https://www.youtube.com/watch?v=p18UayMMIWk
https://www.youtube.com/watch?v=FGxLXqzPe3Q

But I see from the second that the capacitors they both used are probably a good idea to protect against bounce?

Anyway, I'll have some fun/frustration tinkering when the stuff arrives, I am sure. If I can get it working on a breadboard like this I'll look to make a smaller and more permanent version and boxing it up pretty.