An optical flow sensor is a vision sensor capable of measuring optical flow or visual motion and output a displacement measurement based on optical flow (image Pixels counts). This sensor have wide applications and be used for quadcopter position and altitude holding (hovering). It can be also used in mobile robots guidance and positioning. It can also be used for object detection

This sensor is based on the idea of optical mouse (image sensor). It senses the image (camera sensor) of a surface or an object by taking very large number of images (frames) in short time. When the position of the object change the corresponding pixels position change.  Using build in image processing algorithm, then the displacement of the object can be defined.

For more information on optical flow sensors and how does it work, click here
 Research paper on optical flow for position hold
Research paper on optical flow for object avoidance