Actually.. it should work even better at night.
The is the sensor in question is one of these (TCRT5000L).

It has an LED IR at one side that emits an IR light wave.
and an IR sensor beside it, that detects the IR light reflecting/bouncing back off of "something" and back to the sensor.
Hence.. the black and not-black painted parts on the steering shaft. the black paint absorbs and scatters the IR light, so the sensor reads nothing. But, the silver reflects the IR back to the sensor, and thus can be detected by the ATTiny85
Magic!!