This is where everyone makes the mistake of thinking that a low resolution Encoder is good enough, the higher the Encoder count the smoother the servo motors will run ( positioning is only a small part of what a good encoder will do for you ) with low count you get the jerk factor, 12 Bit is about as low as you can go below this are a waste of money
If you look at the clearparth Encoder it is incremental, so there max Encoder of 12,800, is only a 3,200 CPR Encoder
The main thing to remember is the higher the Encoder Count the smoother the cut will be,14 Bit (16,384 CPR ) to 20Bit ( 1,048,576 CPR ) is the standard being used for Routers and Machining Centers
Here is a snip as to what is available for machining Centers and they go higher than this