They use rollers.
When I found the set, I ha actually just been looking for 1um scales to go with TouchDro. I found this instead. I figured worst case was that the display would die and I would just go with the Android set up. Considering the whole rig costs the same as just two glass scales from DroPros it was a no brainer.
As for 2 vs 3 axis. On my old mil, I used the z-axis constantly because I had to raise the head frequently for tool changes. On my new mill, the z-axis is collecting dust on the bench. I will get around to installing it, but so far it has only been a minor annoyance not having it. Either way, I would go with 3 axis.
On 1um scales. The other option is the "standard" 5um scale. a 1um scales will just have better resolution, so when trying to work to 0.001" you have less problems with rounding error. It is important if you have a quality spindle on a rigid machine, and you have to re-zero the DRO as you move around a part. It is debatable if it is worth the money for 95% of us. My reasoning is that if it is not too much more, then it is worth it.