The Entire Guide, Literally
I will make this short. I'm done pulling my hair out trying to make my trains run. I figured it out at last, so here you go.
Rail signals go after intersections, and wherever you want to stack trains in blocks. Rail chain signals go before intersections.
Just one signal of any type on the right-hand side of a track makes that track ONE-WAY. You can see this by hovering over a signal/having a signal in hand, which shows colored lines on your rails. In the attached image, notice the upper rail has a line ending in an ARROW. This means that track allows traffic only where that arrow is pointing. The rest of the tracks have signal blocks with lines ending in DIAMONDS. This means the tracks are two-way.
To recap—ONE signal on the side of a track is what you use for a track that is only ever going to approach or leave a train stop, etc. But you need TWO signals for proper merges/intersections, or in any case where trains will go back and forth along the same rail.
Notice in the picture how the signals on the lower rail are directly opposite each other? This is what you MUST do to make a two-way rail block. If you try to put the signals even a single space apart, that will make its own separate block between those signals with one-way arrows pointing BOTH ways down the rail, causing a deadlock.
Rail signals look at the rail block directly ahead of it. If nothing is there, the signal is green.
Rail chain signals look not at the block itself, but at the signals that define that block.
A chain signal before an intersection works because it reads the rail signal(s) at the exit(s). If that signal sees another train occupying the block the incoming train is pathing through, the chain signal knows its train can't get out if it goes in, so it turns red until that block clears.
In the image, the rightmost chain signal turns blue because one of the rail signals it's facing is red. It'll allow trains on the track going left, but no more trains upwards until that block clears. The leftmost chain signal is red because both rail signals at both exits of the block it's pointing to are red.
Source: https://steamcommunity.com/sharedfiles/filedetails/?id=3359035341
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