When I was younger, I wanted my model railway to have signals. But not just signals set by hand: I wanted them set automatically as trains went past, when the track ahead had a point set against it etc. The technology just wasn't there 30 years ago.
When I started again into this - about 10 years ago now - I looked into DCC as a way to control trains and realised that now, all of the information to work out a signal aspect was available on the command bus. The idea of automatic signal control started there, but I has to learn LocoNet and DCC first.
There aren't many signals on the railway yet: but there will be. It's a modern image railway, so there will be colour light signals, set automatically as trains move. When a train passes a signal mast, the signal will go red; when the points in the track ahead aren't set correctly, the signal will go red. CML Electronics' SIGM20 does all this, and more.
The SIGM20 is fundamentally a LocoNet device, rather than a DCC device. All the information to work out the signal aspect is on LocoNet. It knows the positions of the points; it knows what track sections are occupied; it knows what other signals are set to. The SIGM20 hoovers up this information, and works out what each signal should be set to.