This is from a tutorial I downloaded awhile back (I forget where but I hope it helps you):
Signal Aspects
Aspects are combinations of lights or other indicators (like a semaphore, for
example) that provide the train’s engineer with information about the track ahead
and instructions on how to proceed. In their simplest form, there are three
aspects:
Clear meaning: proceed.
Caution meaning: proceed at reduced speed, be ready to stop short of the
next signal.
Stop meaning just what the name implies.
Given those three states, there are many additional aspects, such as Limited
Clear, Approach Medium, Medium Clear and so forth. These vary considerably by
region and local practice. The signaling guide discusses a number of them.
The game defines the following eight aspects.
1 0 Stop
2 1 Full stop, then proceed at restricted speed
3 2 Caution and left diverge
4 3 Caution and right diverge
5 4 Caution
6 5 Proceed and left diverge
7 6 Proceed and right diverge
8 7 Advanced Proceed
9 8 Proceed
It’s important to remember that AI trains can only use the three basic aspects:
zero, four and eight. If they encounter a signal displaying some other aspect,
they default to the next lower of the basic three: zero or four. For example, if the
AI train gets a signal with an aspect of six (proceed with left diverge), it will
default to a four (caution). If it gets a three, it will drop back to zero (and stop).
Get the idea?
So then, it appears you can build a basic signaling system in Railroad Simulator