Basically, the reed switch consists of two springy metal strips (reeds) sealed in a glass tube, filled with an inert gas which prevents corrosion.
The switch is activated by an external magnetic field. This field can be provided by bringing a permanent magnet close to the switch, or by passing current through a coil which is wrapped around the switch.
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It can be used as part of an intruder detection system, with a magnet fixed to a door and the switch fitted to the door frame.
It can also be used as a high speed relay. Reed relays require much lower operating current than normal relays.
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