What does minimum edge separation mean and which do I have to choose?

Minimum Edge Separation means the smallest possible time between two adjacent edges of the quadrature signal. It is given as a unit of time (μs). Typical selections are 0.07 μs through 20 μs.

When specifying a magnetic incremental linear or rotary encoder, you need to select a Minimum Edge Separation value which is lower than counting ability of counter and faster that the highest speed in your application, when taking resolution into account.

Edge separation time is compromised by three parameters: counting frequency of subsequent electronics, maximum system speed and required resolution.