Signalling confussion.

Is a signal supposed to indicate the condition for the section following a signal or to the section or the preceding the signal?
In Trainz AI, it appears that a signal indicates the condition of the section preceding a signal.
As I understand a signal, it is (loosely) a variable speed sign that as long as the signal is passed at the indicated speed, the train is not required to slow down at the previous signal even if that signal indicates green as what happens with Trainz AI. It is very "nice" to have next signal state on the HUD for us "humans" but maybe AI needs to go back to school. AI has proven to be able to change speed prior to a speed change. Perhaps it needs to learn the same with signals.
Your input would be appreciated.

As I understand it all 2 aspect signals can act under caution when it shows green. Because the signal looks ahead to the next signal it will react to that signal and not the section ahead.