An encoder is an electromechanical device that detects and converts mechanical motion into an analog or digitally-coded output signal. Put another way, it’s a device that converts data into a more understandable format like mp4, mp3, jpg, and more. For television broadcast, video encoders will typically input SDI as an uncompressed digital video signal into H.264 or HEVC.
A hardware encoder takes a feed from your camera and audio sources or your video mixer and is directly connected to the internet. A software encoder is an application that runs on a PC. A video source and an audio source send signals to a computer with a video capture device. The software reads the input and then publishes a stream on the internet. Software encoders are also known as live stream encoding software.