Here's a shot of the tone/abs sensor ring mounted to a new rotor from when I did my brake job a few years ago:
This is a shot of the back of the rotor and you can clearly see the "rusty" sensor ring against the new rotor.
The ring has high and low points that rotate past the abs sensor, which is really just a magnet, that is mounted to the spindle assembly (on the front wheels). I had a close up picture of the abs sensor, but I can't seem to find it right now. If it would help I can find it and post it.
"The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong, it usually turns out to be impossible to get at or repair."
-Douglas Adams, Mostly Harmless