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A signal is a place for a train to wait. It will hold a train travelling in the direction of the tip of the yellow cone. This is the cone that's visible when building/editing signals.
When building signals take a look at the on-screen hints at the bottom of the screen. One of them says that Shift + mouse wheel will toggle signal direction.
The bit about "click on signal to change its direction" applies to signals you have already built. There is little need for that if you build them in the right direction to start with.
In practice, where money isn't super tight, consider double tracking the entire line, merging into one on either just outside the station platforms. Then for signals hold Ctrl+Shift while clicking which will auto-populate an entire line at once with evenly spaced signals. This will divide the track up into enough small blocks for the line to have high traffic flow.
Switches are found in real life sidings. Depending on their position a train will either enter the siding or stay on the main line and bypass it altogether.
At the scale of the game they aren't visible, but their function is assumed.
The confusion might be more that the "sidings" in the game aren't analogous with real-life sidings.
There is a game mechanic of static shortest-path routing. The main exception being that directional signals are obeyed. With such signals there are two paths: an inbound and an outbound.
What we have in the game would be better called "passing lanes." Directional signals are used to split routes into inbound and outbound components. This allows opposing trains to pass one another after some waiting.
Both tracks of a passing lane will be equally used. Which doesn't fit with real life where trains will normally only be directed into a siding when necessary, otherwise would stay on the main line.
PS.
This is not a complaint about the signalling system. Just info about how things work.
Next comes the switches you must get from the buildings menu and place it a distance back from the turnout point. If switch Red then it is too close to that point. Most likely the switch will be facing for left hand running on the track it is placed.. Click on it to reverse direction. To make it a one way track click on the signal circle again but this time with the shift key pressed, the track will give a visual indication of the flow of traffic . Click switch circle again if you need to reverse direction.
If all else fails, follow directions.
(You do know this thread is over a year old, right?)