According to the ZW-L manual:
Your Lionel ZW-L is equipped with three levels of overload protection: dynamic power limiting, fold- back current limit, and circuit breakers. Each output has its own fold-back current limit and circuit breaker. The dynamic power limiting is applied across all four outputs. This provides multi-layer protection for your trains and transformer while supplying the maximum power possible for pulling lighted cars or fighting over grades with heavy loads.
Dynamic power limiting allows the 620W available from the transformer to be shared across the four outputs as necessary to power the connected loads. Up to 180W is available to each output as long as the total power of all four outputs does not exceed the 620W transformer rating. When the 620W total is reached the output that tried to take more power will be limited to maintain the 620W total. The red light on the transformer will flash while the output is being limited. The transformer can run in this mode indefinitely and will not shut down. When more power becomes available because of a change in the demand from the other outputs it will be automatically given to the limited output.
The fold-back current limit protects your transformer and layout from damage caused by severe overloads and short circuits in the case of derailments or objects falling on the track. At the same time it prevents the inconvenience of nuisance tripping caused by momentary overloads. It continuously monitors the output current of all four outputs. When there is a short on any of the outputs it will reduce the voltage on that output in a fraction of a second to hold the current at 10A. If the short circuit is not corrected in 3 seconds the transformer will interrupt power to that output. All other outputs will be unaffected. During the 3 seconds the red light on the ZW-L will flash. Once the output is shut down the red light will come on solid. To indicate which output(s) are experiencing the problem, the back light of the meter assigned to that out - put will be turned off.
For Conventional operation, move the throttle for that output to the Off position to reset the Transformer and resume normal operation. For Command operation press RESET or enter AUX1, 0 on the CAB-2/CAB-1 for that output. The circuit breakers on the ZW-L Transformer are designed as a fail-safe for the electronic over-current protection. Because most problems will be protected by and corrected during fold-back mode operation (described in the previous section), circuit breakers should be tripped infrequently. In the event that a breaker is tripped, the backlight on the meter assigned to that output will be turned off. Refer to Figure 1 for the meters assigned to each output. Correct the short circuit (e.g., make sure that the train's wheels are properly on the track and remove any foreign objects from the rails), return the handle(s) to the Off position, and then press the circuit breaker buttons shown in Figure 3 on page 9 to reset power.