The long and short of it all: A well executed power setup will include TVS diodes and discrete external circuit breakers for all utilized channels and all power sources, classic and modern, from your pre-war alphabet soup, through your classics like the ZW, to your shiny new ZW-L or Z4000.
As for more information on the why TVS diodes and external breakers are needed and such, here is some information I've compiled:
The TVS diode protects against voltage spikes caused by collapsing electromagnetic fields generated by the layout (relays, solenoids, motors, derailments etc).
A short video about those spikes from collapsing magnetic fields (scaled up from our trains, but lays out the scenario in an easy to consume way):
Since the source of these spikes are layout side, you want the protection layout side. Many people put these TVS diodes on the track, others put them on the output terminals of the transformer, and some do both!
With a ZW, it is easy to take 4 TVS diodes, shape them like this so they wrap around the binding posts, (A-U, B-U, C-U, D-U).
The 1.5KE36CA is what seems to be generally recommended around here and good for most any O gauge AC setup.
These diodes are sacrificial. They degrade as they protect against the voltage spikes. Just as your surge protector power strips recommend replacement every so often, same goes for the TVS diodes for similar reasons. TVS diodes can fail silently (no symptoms in operation), or fail spectacularly as a dead short, or fail annoyingly open preventing any power. There isn't a practical way for the layman to test the diodes for all the failure modes, so having a few on each buss and a replacement schedule (every few years) seems to be a reasonable balance.
Most people immediately think about their track and expensive locomotives, but don't forget to protect your accessory buss as well. They also have solenoids, relays, motors, and other sources of the EMF.
Some argue that power systems, like the MTH TIU, already have a TVS diode. That is true, and does offer protection, but it is thought to be better to have the protection closer to the sources, so the closer to the track, the better. Some even make it a practice to install these diodes directly in the locomotive so they don't have to worry about their club or friend's layout having the proper protection.
Most of all, the myth that fast acting circuit breakers (or fast blow fuses), whether included in a modern transformer, or externally are all you need is false - they do nothing to protect the sensitive electronics from these EMF voltage spikes. However, additional circuit breakers should still be considered essential. The main purpose of the transformers circuit breaker is to prevent the transformer from being damaged by an over current situation - this sometimes has the side-effect of also protecting downstream equipment (trains), but again, is not the principle purpose. If you have a huge honkin' tonkin' transformer capable of 15A output, but your train only needs 5 amps, then it should be on its own buss/block with a 5-7 amp breaker. This helps the small wires in your engine or powered rolling stock from carrying 15+ amps and melting in a direct short situation. For an accessory buss with small gauge wire, you definitely do not want 15+ amps going through that in a short situation, so again, an appropriate sized breaker.
Another need for external breakers on each buss/channel is that on classic transformers, not all potential power paths are protected. For example, a ZW with 4 channels, only has the U terminals behind the breaker. A short could happen between any two non-U posts with no internal overload protection.
For circuit breakers (and fuses), there is this misconception that circuit breakers trip the instant they are over their rating. i.e a 10 Amp breaker will trip at 10.01 amps or 10.1 amps, or definitely by 10.5 amps. That is generally not true. Just take a look at a generic breakers specification sheet:
In this common example, you can see that constant 135% overload (13 Amps on this 10 Amp breaker) could take an hour to trip. (https://ogrforum.com/...cuit-breaker-stumped). As such, there are those who seek out magnetic or electronic breakers over traditional thermal ones. However, remember, in a dead short, something like a ZW can pump out 50 Amps minimizing the trip time of even thermal breakers (and also illustrating the need for discrete channel breakers - imagine 50 amps going through a small 24 gauge locomotive or accessory wire for an instant).
Most of all, this advice/recommendation for TVS diodes and discrete external circuit breakers pertains to all power sources, classic and modern, from your pre-war alphabet soup, through your classics like the ZW, to your shiny new ZW-L or Z4000.
If you are curious about the trip times of the classic Lionel transformers, the 5D testing documents have a nice chart to reference:
