Potentiometers and rotary encoders—see this post for discussion about the difference between the two—make excellent input methods. Most will have some sort of feature or marking to indicate the knob’s direction, but how much cooler would it be if the encoder had a series of LEDs coaxial with its shaft to show just where it’s pointed?
That’s the idea behind this Circular LED Ring Indicator board, which has accommodations for 16 LEDs aligned around a central opening. Lights are controlled by a TLC59116 IC, which allow for I2C operation from your microcontroller. Notably, this listing is for a bare PCB only, so you’ll have to take care of component sourcing and soldering yourself. Results, seen in the video below look quite good, perhaps worth the sourcing/soldering effort involved:
If “I2C encoder” sounds familiar, you may be thinking of this excellent I2C encoder board from DUPPA, and it would seem that these two devices would compliment each other quite nicely. For another light-indicator encoder application (using DUPPA’s board), check out this post on how to build a custom volume control rotary input. Since I wrote that post several months ago, I still use the device nearly every day!