Limit Sensing (limit switch, prox switch) is a mechanism that sends an electrical signal to the control box of a tool when the tool reaches the limit of its travel in any direction. This is accomplished by placing a switch at the limit of tool travel that is closed (pressed) by some element of the tool when it moves over the switch.
The most common use of limit sensing is to home the tool--returning it to the same start point each time the tool is powered on.
Some limit switches are mechanical, with a small lever that is depressed when the tool moves close to a limit. Others are magnetic, with a small sensor detecting the presence of a magnet that is mounted on the tool when it is moved close enough to the sensor.