Railroad signals are a science all by themselves, with a long history of different methods starting with the guy who hoisted a leather ball stuffed with straw to the top of a pole to indicate line clear, and lowered the ball for a set period of time after a train passed (the origin of the term "highball" for full speed ahead). Interlocking signals are signals that are linked across multiple switches so they will only show a clear aspect if all the switches are set correctly, if any one switch is in the wrong position the signal remains red. Trainz signals by default don't have links like MSTS and railworks (railworks interlockings work great, too bad the AI doesn't work at all), but if these new signals can be linked the procedure should be similar - link 0 next to the signal, link 1 on the exit route on the other side of however many switches are involved, any one switch set the wrong way will interrupt the trace and cause the signal to go red.
Some basics of a simple mechanical interlocking;
Three rods connected to levers, the blue and red rods are connected to their respective switches in the bottom track diagram. Top black "master" is contacting the green line signal control, switches are both set for the green line, no signal control voltage on the purple line means those signals set to the default red aspect. Neither switch can be moved until the master interlock rod is lifted.
Master interlock rod up, now either switch can be thrown for the curve - contact has been broken with the signal control, so now all signals are red for both lines.
Red switch thrown curved - but the master interlock rod is blocked from dropping down regardless of whether it's moved to the left or right, in this position the red control rod blocks it from dropping down, slid over to the right the blue control rod blocks it.
Both switches thrown curved, master interlock over to the right, can now drop down to make contact with the purple line signal control. Now both switches are set for the purple line, purple line signals clear if the block is not occupied, green line signals red due to no control signal.
You could spend years studying the concept of interlockings, but the general idea is to allow train movement through a junction only when all the conditions are correct for that movement.