A three terminal magnetic sensing device (TTM) having a trackwidth defined in a localized region by a patterned insulator, and methods of making the same, are disclosed. In one illustrative example, one or more first sensor layers (e.g. which includes a “base” layer) are formed over a collector substrate. A patterned insulator which defines a central opening exposing a top layer of the one or more first sensor layers is then formed. The central opening has a width for defining a trackwidth (TW) of the TTM. Next, one or more second sensor layers are formed over the top layer of the one or more first sensor layers through the central opening of the patterned insulator. The one or more second sensor layers may include a tunnel barrier layer formed in contact with the top layer of the one or more first sensor layers, as well as an “emitter” layer. Various embodiments and techniques are provided.