Now that the mechanical ball mouse has long been forgotten for most PC users, the majority of mice available today are classified as either "optical" or "laser". The old ball mice were highly mechanical (the ball spun two wheels that rotated slotted discs that blocked and unblocked a li? you know what, it doesn't matter), but the newer mice use an LED or laser reflected off the surface to determine the mouse's movement.
Full story from the WindowsCentral blog...