What instrument measures displacement?

Answer 1

It depends greatly on range of displacement. Are you looking at Neptune or a molecule?

For the smaller realm using noncontact techniques:

For highest resolution, laser interferometers

They are large, difficult to use, and very expensive.

Capacitive sensors, such as those measure with nanometer resolution and micron or mm ranges. They require metallic target materials for easy/accurate measurement although nonconductors can also be sensed, but it is not usually for displacement.

Eddy-Current sensors, measure displacement with submicron resolution with larger ranges than capacitive. They work with conductive targets only and their sensing characteristics are dependent on material. Sometimes this fact is used to make material sorting sensors.

Answer 2

An instrument that measures displacement is a displacement sensor. These sensors can come in various forms such as linear variable differential Transformers (LVDTs), potentiometers, or capacitive sensors. They are commonly used in industrial applications to detect small movements or changes in position.