The basic Trainz signaling is based on a basic Red = stop, Yellow = caution, and Green = proceed system. The reason for this is because there are so many different signaling systems in use worldwide, it's best to support the basic system. That said, many of the content creators, such as Jointed Rail, have created scripted signals based on particular signaling systems in use. JR's signals, for example, are based on the NORAC system. There are others who created the CROR, or Canadian system, and there are those that have signaling systems for the UK/Australia, Germany, and other places in Europe.
If you are interested in the US signaling, I recommend Jointed Rail's Searchlight or Hall SR signals. The Hall signals begin with JR SL. There's a series of signals based on a numbering system that's relatively easy to follow.
04 (Type 04) signals are Absolute signals. These are Red or Green and nothing else. There are various sizes with left and right variants and have a name that begins with: JR SL(04).
05 (Type 05) signals are Permissive signals. Permissive signals allow for more than one train in a full block and allow the driver in one block to see the upcoming signal as they move along. They can also be considered advance signals. Technically, there's a difference but Trainz considers them as one in the same. I find placing these along the line at set intervals allows other drivers to enter in to a block and "follow on the yellows" as a train ahead occupies that section ahead of the train behind.
06 (Type 06) signals are Diverging signals. These are placed before tracks split to indicate which direction the line is the active line. A right diverge will have the lower aspect as the green and the left diverge as red. All inactive or closed lines are indicated as red in signaling systems. There are some Distant signals that also have two heads. You want to use these in advance of a diverging signal to indicate that one is coming up.
08 (Type 08) signals are Interlocking signals used for crossovers and wyes. Each signal is placed at the single point on a wye to indicate the line is safe to pass through.
For actual signal placement, I recommend opening up working routes in Surveyor and observe how the signals are placed. You can also experiment with them on a test route, and also use logic. Where tracks split, for example, you want to place a two-headed Type 06 in front of the converging two tracks. Where two tracks go from single to double, you want to put a Type 06 on the single track with the lamps facing down the single track. On the side where the double track come together, you want to place a couple of Type 04s or Absolute signals to indicate to the drivers on the double track side to stop for the switch if it's set against the driver.
