There are all kinds of signals out there. Overmod covered the block functions. I model the Southern Pacific and they use single head tri-color signaling. Each block needs a detector of some sort to tell the controller that the block is occupied. I used current detection for many years on my DC powered layouts and when I went DCC that dinged my DC current detection. I built up a DCC system (also current detection) from Rob Paisley Circuits, they work great.http://www.circuitous.ca/CircuitIndex.htmlRob Paisley Circuits work extremely nice and are very reliable!!!Last year I decided to go with optical detection so that the rolling stock axles do not need resistors to trip the detectors. With optical detection any thing blocking the optical beam (or reflected beams) trips the signal system. Optical detection is not for everyone.I use an Arduino UNO for my signal controller. I only sense block detection to operate the signal lights. The Arduino FC-51 IR Infrared Obstacle Avoidance Sensor Modules work very good (either across the track or reflective) and the price is right too.Mel My Model Railroad http://melvineperry.blogspot.com/ Bakersfield, California I'm beginning to realize that aging is not for wimps.
You should get many answers here on how to wire the layout so the lights work. What I'm going to discuss is what comes before that.
Automatic block signals are not traffic signals -- they only tell whether something is occupying (or might be blocking or damaging) the track in sections of defined length. By general convention red means the 'next' block is occupied, yellow the one in 'front' of the next, green clear. Note in particular that red need not mean 'stop and stay'.
Some signal designs 'overloaded' speed information onto color light signals -- some light indications indicate proceed not exceeding a particular speed. Other signal systems overlay route information on color-light systems. You can consult the relevant sections of NORAC, GCOR and CROR (all of which can be found online with a little patience) to see some of your options; your three-LED heads would be fully compliant with PTC requirements.
Actual movement of trains in most cases is still handled with orders, something that American signal systems don't model. Again there are others here who can explain that for your intended purposes.
Folks, I know very little about signaling. I am wanting to install a block system. I am in N scale and found some 3 LED hooded signals. I think I have a handle of setting up the blocks. I want to use the atlas system but availability may steer me to trying arduino. That however is not my reason to address this comunity. I have a crossover when you come out of my yard. I was thinking it would be ideal for a signal bridge of wich I stiil have a kit. I have not been able to find imagesor an example of how the crosover would be signaled.
Perry