Protect Pycom Lopy from 12V input signal
The sensor is shown here

It says that it has a PNP output switch with positive logic output.
This means that the output (black) is open circuit when off and outputs V+ when on.
The reed relay needs to connect from output to ground = (based on your image) Black (output +ve) to blue (ground).

If your uC (microcontroller requires a 0/3.3V signal you could divide the output by 4 to give 0/3V operation.
eg 39k + 10k from output to ground with output from the centre point.  

Your 100k / 33k may be OK - but the Pi-Face will have some upper limit to the input impedance. Even eg a 10k/3k3 will probably be acceptable as that draws only 12V/(10k + 3k3) or ~~= 1 mA from the sensor.

Variation in the output can be "slowed" using a capacitor from centre tap to ground or even in this case from the sensor output to ground.
Divider point to ground = slower on than off.
Sensor out to ground = fast on, slow off.
Too big a capacitor on sensor output MAY damage it.

Time constant on R centre point is ~~ C x (resistance of two R's in parallel) for turn on and C x Rlower for turn off (if PiFace input resistance is high.)



What is the meter maximum output pulse rate?