Name this short-range optical component
That, my friend, is an Optical Finger Navigation Sensor. Specifically, it looks like something out of the Avago portfolio that's been sold off to Pixart Imaging; they currently sell the ADBM-A350 (Datasheet) that I would look at for more information. This also comes in a sensor-only package, the ADBS-A350, that you could use if you wanted to do your own optical design. Essentially, it works the same way an optical mouse sensor works -- a low-resolution image sensor tracks pixel intensities to determine displacement.