CDs and other optical media formats are amazing devices, capable of reading an enormous amount of information from a small reflective disc. They work so well and contain so much data that many never stop to consider what’s going on, that it's just a "black box" or "magic" depending on your preferred nomenclature.
In fact, as explained in Jon Bumstead’s video below, the concept is fairly simple — information that is stored as on a disc is read bit by bit using a laser/sensor that moves in and out as it spins. Since these bits are normally much too small to see, he built a number of wooden discs that represent data as large visible holes, and a player on which to read them.
Bumstead’s project uses a pair of lasers and photodiodes, along with the proper amplification setup to read them. The disc is spun in an upright orientation — like a record player flipped on its side. One laser sensor assembly reads holes in the center of the disc that provide timing data, while the other moves on a stage to read the 1s and 0s that represent data as holes and solid “non-holes.”
Processing is handled by an Arduino Nano. As the disc is being read, it shows data as dots on an LED matrix below, and even outputs MIDI signals for audio feedback. When the reading is completed, it displays the decoded message on the screen, such as “don’t panic,” a perpetually helpful phrase!