This instrument of devotion, so popular in Thibetan Buddhism, is comparatively rare in Japan, and is used in a slightly different manner, no prayers being written on it. Its raison d'étre, so far as the Japanese are concerned, must be sought in the doctrine of ingwa, according to which everything in this life is the outcome of actions performed in a previous state of existence. For example, a man goes blind: this results from some crime committed by him in his last avatar. He repents in this life, and his next life will be a happier one; or he does not repent, and he will then go from bad to worse in successive rebirths. In other words, the doctrine is that of evolution applied to ethics. This perpetual succession of cause and effect resembles the turning of a wheel. So the believer turns the praying-wheel, which thus becomes a symbol of human fate, with an entreaty to the compassionate god Jizō to let the misfortune roll by, the pious desire be accomplished, the evil disposition amended as swiftly as possible. Only the Tendai and Shingon sects of Buddhists use the praying-wheel - goshō-guruma as they call it-whence its comparative rarity in Japan. Visitors to Tōkyō) will find three outside a small shrine dedicated to the god Fudō close to the large temple of Asakusa. They are mounted on low posts not unlike pillar post-boxes.
The wheel which figures so frequently in Buddhist architectural design is not the praying-wheel, but the so-called hōrin (Sanskrit dharmachakra), or "Wheel of the Law," a symbol of the doctrine of transmigration. Neither must the praying-wheel be confounded with the "revolving libraries" (tenrinzō or rinzō), sometimes met with in the grounds of Buddhist temples. These "revolving libraries" mostly contain complete or nearly complete sets of the Buddhist scriptures; and he who causes the library to revolve, lays up for himself as much merit as if he had read through the entire canon.
Book recommended - The Buddhist Praying-wheel, by Wm. Simpson.