This is basically correct. The toothed ring is actually called an exciter ring. There is a "Hall effect" sensor that sits above or near that (they do not touch). Basically when each tooth on the exciter ring passes the sensor at some speed a measurable charge is produced. So the computer monitors for a charge present and its rate. If the wheel is not turning there is no signal from thet sensor and ABS is engaged. Most new veicles have a speed sensor that works exactly the same way. Just counting the frequency of the teeth passing and converting that to a speed.