The rotors on the High Resolution Twin Motor Kit are made of PCB and the code wheel is implemented in the copper layer with 200 lines/revolution.
By triggering on both leading and trailing edge of the light pulses, resolution can be increased to 400 and by using both channels in the position sensor’s edges resolution can be increased further to 800.
Interpolation and micropulsing significantly increases resolution.
Using a custom-designed encoder with an even higher pitch is of course also an option.
It’s possible to have a pitch as fine (and precise) as your optical switch and code wheel allows.
The finest resolution is achievable with a technique called micropulsing. Movement size can be as small as 1/2,500,000 of a revolution.
See What is micropulsing?