the first question is how the interpolation is done. I don't know exactly, but I thought that the encoder produces two analog sine-wave 90°-phase-shifted signals. This analog signal can then be interpolated into "arbitrarily" small digital steps. Then the movement of the axis is also recognized with every interpolated step. Isn't it?

 

The second question is how Sitech processes the steps. And I hope: PHD2 gives a correction pulse, Sitech starts the motor, recognizes the axis does not move, so keep moving the motor until the axis moves and then  executes the correction pulse. Is that so?
Ralf