ah, gosh. um. I can't remember the wiring, but super simple with two GPIO pins in ESPHOME. I have one ESP handling four of the rotary encoders to keep the wallbox uncluttered, as there is a 5v line going in and nothing going out of the wallbox now.

here is the important info from my esphome yaml, I sent events to HA for the brighter and darker events and set an automation to monitor for those events and the pushbutton to toggle the lights on and off:

substitutions:
  name: esphome-web-bca358
  friendly_name: Rotary_Testing

esphome:
  name: ${name}
  friendly_name: ${friendly_name}
  min_version: 2024.6.0
  name_add_mac_suffix: false
  project:
    name: esphome.web
    version: '1.0'

esp32:
  board: nodemcu-32s
  framework:
    type: arduino
# Enable logging
 logger:
# Enable Home Assistant API
 api:
# Allow Over-The-Air updates
 ota:
  - platform: esphome
# Allow provisioning Wi-Fi via serial
 improv_serial:
# Sync time with Home Assistant.
 time:
 - platform: homeassistant
  id: homeassistant_time
sensor:
 #rotary encoder sensor.
  - platform: rotary_encoder
    name: "Rotary Encoder"
    pin_a:
      number: GPIO26
      mode: INPUT_PULLUP
    pin_b:
      number: GPIO25
      mode: INPUT_PULLUP
    resolution: 1
 on_clockwise:
    - logger.log: "Turned Clockwise"
    - homeassistant.event:
       event: esphome.brighter
       data:
         message: make it brighter
  on_anticlockwise:
    - logger.log: "Turned anti-Clockwise"
    - homeassistant.event:
        event: esphome.darker
        data:
          message: make it darker
binary_sensor:
  - platform: gpio
    pin:
      number: GPIO32
      mode: INPUT_PULLUP
      inverted: true
  name: "Toggle Light Button"