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The "sensor" is known as a track circuit. They run a low current through the rails, and this holds a relay open, allowing current to flow through the green light. When a train shunts the circuit through its metal axles, the relay drops (no current!) and the current flows to the red light. (This is a fail-safe feature; that way, if any component fails or the system loses track circuit power, it drops to red. You need a flow of energy to keep it green, not the other way around.) The yellow light means the next signal is red, and the engineer must proceed prepared to stop. (Usually a speed restriction is attached to this - 30 or 40 MPH, depending on the road. This is an extra safety feature; that way the engineer is required to do something the moment he sees the yellow signal. It's a psychological thing, rather than risk letting him/her just pass by it and forget about the warning.) The yellow light is activated by another relay - There's a second relay in the signal that switches between green and yellow; I believe this relay is held open (to the green light) when there's current flowing through the NEXT track circuit; when that circuit is shunted - and so the next signal red - the relay loses power and drops, and the signal shows yellow. There's no timer that controls the transition from red to yellow. (Remember, the fundamental cornerstone of block systems since the end of the early days has been separation by some distance, not by time!)
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