Q:

What do the values on the back of an encoder mean?

I have an encoder (at first I thought it was a potentiometer!) and on the back it has B1 03 (separated). 
Research thus far has shown that an encoder can have anywhere from 100 to 6000 steps. I imagine those numbers are related to that value, but I do not know how it reads. 
Do they have meaning? (This came with my Arduino) 

A:

If you have the datasheet for the exact manufacturer of the part, they may have meaning. Often a given encoder maker will have one (sometimes two) standard number(s) of steps for a given model. 
If it's a typical shafted mechanical panel encoder, it likely has more like 12-24 steps (full steps with both phases changing) and an equal number of mechanical detents. You can count the detents easily by hand if you attach a knob with pointer. 
The exact number is usually unimportant since the point is simply to get relative change, however if you use an encoder with far too few steps with firmware that expects more the user may have a sub-optimal experience. 

