What this is supposed to be is a building (like the saw mill) that has a point to point track going back and forth around it. The two switches are wired together so that when one is activated it also changes the other. Switches are powered by the weight of the engine momentarily connecting a devise called a TAD (track activation device). This slides under the track but has no electrical connection to the track. The weight of the engine presses down on a contact is what completes the circuit.
I actually have the components of this wired up on my workbench and it works very nicely.
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