The "sensors" clip onto the brake pads. I say "sensor" because it's really only a couple resistive circuits. Each sensor has three circuits in it. Two of these circuits have a resistor on them and one does not. As the brake pad wears, the circuit in the sensor grounds out on the rotor. Through each resistor, the ABS module will see a different signal voltage for each of the three, which is equated to brake pad wear. They are also only on the left side of the vehicle, front and rear.
On the cluster, brake pad wear is estimated as a percentage. The initial brake pad wear is a true estimation based on brake application. Once the first part of the sensor is grounded, meaning 30% of the pads have been worn, that wear rate is taken into account in the calculation until the next part of the sensor is grounded, and so on.
When the last portion is grounded, the pads need to be replaced. You'll get a message on the cluster and the screen will change from a percentage to a mileage. I think the default when the last part of the sensor hits is 2,000 miles pad life remaining. It will count the milage down while continuing to give messages that the pads need to be replaced until the pads life system has been reset.
There is also a method in the cluster to disable the system if your aftermarket pads don't have provisions to mount the sensors or don't include new sensors (which are also a wear item and need to be replaced with the pads).
FWIW, list price for a new sensor is $24.