Gray code is something semi-related. For hardware encoders of a position you want only one transition between states, that is, the XOR of the two to have only one bit set. Normal binary has multiple transitions between some values (e.g. three bit changes between 011 and 100). Gray code could be 000, 001, 011, 010, 110, 111, 101, 100.

https://en.wikipedia.org/wiki/Hamming_distance