The fundamental need is to be able to split the track into blocks, and monitor the presence of trains in each block. Each block must be longer than the largest train; movement from block to block sets the basis for automatic control. If the block ahead is free, a train can proceed; if it is not, a train must stop.
It is logical for each block to have a signal, which tells the train driver if it is safe to proceed; on this railway, those signals are automatically set. That requires an ability to detect trains.
We need to be clear at this point that the computer control software packages need to know that something is occupying the track. They don't need to know what is occupying the track. Consequently Digitrax's "Transponding" is not required.