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once you select the proper materials you want, you'll start to see resource carts comming from resource nodes, without the need of any conveyor belt... they'll just find the way. but as Ktomm said, you need to have it on the edge of the city and also not having buildings blocking the entrance on that edge.
once that building starts filling with materials, you can just output the ones you want, same way as the main structure.
Carts go same speed as in belts, and also applies any cart speed upgrade you have. I'm not 100% sure how is distributed if you already have a belt for that mine and also use resource drop. but I just stop use belts for mines when I have the resource drop
It needs to clarify that yes, it can replace rails outside of the city and what its speed is compared to a single rail line.
The most obvious benefit of the Resource Drop is that it saves you the cost of ever having to set up rails to fetch resources from resource nodes - or the hassle of managing the rails system to collect every resource across the entire map. As a knock on effect you need far less gates out of your base as any number of carts can go through one gate while each dedicated rail needs its own gate.
The hidden benefit I didn't realise is that the Resource Drop can hold an unlimited number of raw resources. Most sane people will connect a wood resource node directly to a Wood Warper and connect the Wood Warper to the City Core to send the processed goods there for storage. With this setup, you can only deplete the wood resource node as fast as the Wood Warper consumes the raw wood off the rail between the two. With the Resource drop, wood is extracted from the wood resource node at max speed and does not stop if the Wood Warper can't consume the raw wood fast enough - so with the Resource Drop you can finish extracting all the wood from the node preemptively, shut down that mine once you done and move onto the next resource node. Its a much faster and resource efficient way of extracting raw resources and allows you to strip mine the entire map, abandon all your mines and then focus solely on processing :p