The most common form of rotary control on electronic equipment is the potentiometer. They are used for applications such as volume or tone controls on audio equipment and are available in panel and PCB mounting versions. A potentiometer has three terminals and is basically a variable potential divider.

A potentiometer has a resistive track (normally made of carbon), the ends of which are connected to two of the pins (T1 and T2). The vaolue marked on a potentiomer refers to the resistance of this track. The third pin is the the 'wiper' connection (W); this touches the track at an adjustable point set by the control shaft. The internal construction of a potentiometer is shown below:

Potentiometer Pinouts and Internal Contruction

Comparing this to a potential divider circuit  it can be seen that the two parts of the track either side of the wiper form R1 and R2, and the wiper provides the output from the divider.
Symbol and Connections:
The diagram below shows the standard symbol used for a potentiometer and typical connections when used as a volume control or similar. See below for details of using a potentiometer as a variable resistor:

Potentiomer Symbol and Typical Circuits

E.G. for a linear potentiometer, if the input voltage (Vin) is 1V and the shaft is mid-way the output voltage (Vout) will be 0.5V.

Potentiometer Types:
Linear potentiometers have a constant resistance all along the track, so the output voltage is proportional to the position of the control shaft. For audio applications logarithmic types are more suitable; these have a non-linear track (supposedly logarithmic, but normally an approximation) to give a smooth response with logarithmic audio signals. Using a linear potentiometer as a volume control will give a large variation in level at one end of the rotation with little variation otherwise. Linear types are often marked A, with logarithmic types being marked B.
Other Potentiometer Configurations:

A potentiometer can be used as a variable resistor by only connecting one track connection and the wiper. In this case the resistance will be 0 at one end of the shaft's rotation, and the resistance quoted on the component at the other. Often in this configuration one end of the track is connected to the wiper instead of being left open-circuit (see diagram above).

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