RMC recently had an exhaustive article on signals spread over a number of issues. I tried to take it in, month by month, but it's probably easier to understand read in its entirety.
Bruce
I believe that series was Bruce Chubb again. Yeah, it's like wait til the series is complete, then "binge read".
Don, there are two types of signals, BLOCK signals and INTERLOCKING signals. Interlocking signals involve switches and diamonds, and control movements through the plant. Block signals convey information about track conditions ahead in areas that have no switches or diamonds.
As others have said, for modeling purposes, you can get as complicated as you want. For block signals they should be spaced at least one train length apart. Interlocking signals are placed at all entrances to the plant.
I'm building a large layout, but I don't have many block signals. Most of mine are interlocking. I build all of my own signals using bi-colored LED's and plastic targets from WeHonest on the bay.
Here I've taken one and a half 450 signal bridges to make a triple track bridge, then applied my home made signals.
A close up of the construction process.
Mass production.
The four signal masts on this Plasticville bridge are among the few BLOCK signals on the layout.
Different railroads used a wide variety of signals, some rather complex. As railroads have merged themselves down to six class ones, old signal systems of predecessor roads have been replaced in the name of standardization and simplification. The time period you model is just as important as the railroad.