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Inside are two sensors, one is a classic 3-axis accelerometer, which can tell you which direction is down towards the Earth (by measuring gravity). The other is a magnetometer that can sense where the strongest magnetic force is coming from, generally used to detect magnetic north.
This compact sensor uses I2C to communicate and its very easy to use. It can be use with either 3 or 5V microcontrollers. Simply connect VCC to +3-5V and ground to ground. Then read data from the I2C clock and data pins.
This board/chip uses I2C 7-bit addresses 0x19 & 0x1E.
Adafruit Product Page: https://www.adafruit.com/products/1120
Arduino Library: https://github.com/adafruit/Adafruit_LSM303