This is basically a classic window comparator, with stuff around it to make is actually useful in the particular application.
PIR sensors report changes in IR accross the sensor area. C2 removes the DC bias, and the circuit around IC1D amplifies the result and also does some frequency filtering. This is probably in part to reduce frequencies that aren't relevant and therefore just add noise, and in part to get the response of the overall sensor+filter that is useful for detecting motion.
IC1C and IC1B are the window comparator. R7, R8, R9, and R10 are a divider chain making voltages for the output of IC1D to be compared against. Just from the topology without looking at any numbers, you can see that the threshold for IC1C is higher than that for IC1B. Also see that the input signal into the window comparator (outout of IC1D) is fed in to the two comparators (IC1C and IC1B) at opposite polarity. In the "window" region, which is the voltage range between the - input of IC1C and the + input of IC1B, both amps will be driving low. Below the window region, IC1B will drive high and IC1C low. Above the window, IC1C will drive high and IC1B low.
The two comparator outputs are averaged by R11 and R12, then the result compared to a threshold by IC1A. This threshold is set so that IC1A drives high only when both comparator amps are driving low, meaning the voltage is in the window region.
The digital signal that indicates whether the sensor output is within the window region is capacitively coupled into this HT2812 thing. I didn't look that up, so I don't know what exactly it does, but from the transistor and speaker it is probably intended to produce a beep when motion is detected.
I'm not sure what the point of the switch in series with the KEY input is. When the switch is open, the HT2812 block won't receive the motion signal. If that is the intent, then powering everything down would be the more obvious approach, so there is probably some additional feature it supports. I don't know why you'd want to only sound a beep due to motion when a button is pressed, but that appears to be what what this circuit will do.
You might have to put one before the op-amp and one before the ADC. The one before the ADC cleans up line noise as well as op-amp noise as well as performing a certain amount of alias reduction.
The one before the op-amp stops EMI getting in and upsetting the op-amp into producing false dc offsets (it's called input RFI rectification) - see this.
You might have to do some filtering in the MCU too but, a little bit of noise can be a good thing - see dithering
You might also need a low pass filter at the probe and this depends on how well the probe copes with noise at its power terminals (if it has any).
If the probe has an earth connection you might also need to consider isolation methods to avoid ground loops. There are plenty of things that may be relevant.
Best Answer
If you are describing an encoder - not a sensor then your outputs are probably:
X+: 0 and 5V. (not ± 5 V) X-: X+ inverted.
simulate this circuit – Schematic created using CircuitLab
Figure 1. A typical A-B-Z quadrature encoder output waveform with differential outputs.
The inverted output gives the ability to improve noise immunity in the presence of electrical noise.
Figure 2. This diagram illustrates how a differential encoder is able to ignore noise. Channel Ā is the inverse of channel A, generated inside the encoder. However, when noise is introduced along the wire between the encoder and the encoder interface, the noise will be almost identical on both channels. Since the noise is not inverted on channel Ā, the differential encoder interface can perform a few simple operations to filter out the noise. Source: Phidgets.