Alternative to digital rotary encoder

Per this DC tachogenerator?

550ms at 123RPM is 0.55/(123/60)=0.26 revolutions, I'd doubt that the device under test/physical rotor speed/red trace/input is changing speeds by +/-20% in 20ms. The variation in the speed signal looks like an artifact of the geometry of the coils versus the magnets. I would think that 5000Hz(20 corrections/dot?) adjustments in a control system with an input like this are mostly chasing noise.

How fast does the motor speed change versus a step change in input voltage?