SVN stands for Subversion and its really handy for development and scripting as you can revert back should something unrecoverable happen (provided it was all committed before hand).
You'll need a computer to act as a server with a good amount of hard drive space (or if you have a good amount of hard drive space in your computer, then install the SVN server on your main system) as each revision committed can add up overtime. It won't be super quick as it only sends the changes over - not the actual file (exception will be first time committing where whole files are sent).
Right now after using it for about 4 years now, I have 2637 revisions and I can go anywhere between the latest (current 2637) to 100 if I wanted to, and then jump back to 2637
There are a ton of SVN server programs (from the looks of it anyway) available for Linux, some NAS units support it, but for Windows it looks to be restricted to just one as I couldn't find any other.
For the client side you'll need something like TortoiseSVN so it can communicate with the server and download and send files to it. There are a several available.
For my setup, I have my own network server with VisualSVN installed (which also sees outside traffic from some friends that also uses the SVN for their game mods. Keep in mind that if you want to access the SVN server outside of the network, you'll need to port forward on your router). Community edition allows you to go up to 15 users before you must upgrade. There are other features that are locked behind the paywall but most you probably won't be touching anyway. Keep in mind that this is mainly used in business environments so prices won't be cheap should you decide to upgrade (5 user license starts at $55).
For client I use TortoiseSVN.
For the Trainz folder, I have the local folder that'd see the SVN as everything else is either built into the game or on the DLS so if something does happen, I can just download the local folder, download the DLS items, and be back to where I left off.
Cheers