Encoders are sensors hooked up directly to servo motors. They monitor the position of the motor so the machine can position accurately.
If there is damage to the encoder, it will misbehave in a number of different ways.
The motor might run away (typical of a destroyed encoder) The position might drift (typical of a dusty encoder) The system might generate position errors
It is normally required to have motors with encoder problems serviced by Techno CNC. It is not recommended that end users repair or replace encoders, which are very delicate and require experience to install.