Whenever there is more than one train on a track, there is the possibility that trains can crash into each other:
To prevent trains from doing that, we can place regular rail signals at intervals along the track:
A regular signal protects the following block up to the next signal (or the end of the track.) If the signal is red, no train can enter the following block:
The area shown in green is now protected by the signal.
That's really all there is to regular signals.
A chain signal on its own without any other signals behind it behaves just like a regular signal:
If there is a signal behind the chain signal, the chain signal will "copy" that signal:
That's not quite useful on a single track, so let's look at a practical example.
Consider the following double crossing where each track is two way:
There is plenty of opportunity for trains to crash into each other.
Now we can place regular signals at each entrance into the crossing. We also need to place paired signals on the other side of each track.
This setup will now protect any trains from crashing:
But there is still a problem. While the trains won't crash into each other anymore, they can get stuck:
The second train has entered the crossing, and now needs to wait for the first train to clear the block after the crossing. While the second train is blocking the crossing now, all other trains would have to wait as well.
The whole setup works, but it is not ideal. We should replace the entrance signals with chain signals instead:
The chain signal "copies" the exit signal to before the crossing, so that the second train has to wait before the crossing now. North/south trains can still use the crossing while the second train is waiting for the first train to exit the block after the crossing.
Effectively the whole crossing is protected so that only one train can enter the crossing at any time. All other trains need to wait outside.
Chain signals can also be used to only partially protect a crossing as necessary.
Consider the following track split (traffic from left to right only.) The chain signal is green because all exit signals are green:
If any of the exit signals is red, the chain signal becomes blue:
If all of the exit signals are red, the chain signal becomes red as well:
In the game, a blue chain signal is treated as a red signal if the train wants to use an exit where that exit's signal is currently red. The chain signal is treated as green if the desired exit's signal is green.
To convert the track split into a two-way split, signals have to be placed for the other direction as well:
Again, effectively this track split is now protected so that only one train can enter it at any time.
Simply use two of these track splits at each end to build a bypass area.
Big Crossing Example
You can use chain signals to protect any kind of crossing, for example this big one. Only one train can enter the crossing at any time.