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Here's why I think it's something like this: I built a few telegraphs with an engineer corps to fill some gaps. I waited a day (just to make sure things synced), and toggled the telegraph button to show connections. Specifically, I'll use Chattanooga as an example (Montgomery capitol). To get to Nashville/Louisville, the lines go: Mont>Mobile>NO> BR>Vicks>Corinth>Nash. Going east, they go Mon>>Atl>Macon>Columbia then up.
I was expecting them to form connections between the existing lines at Chat, basically Atl>Chat>Nash. Should be in range. No connection. Moreover, the corps shows a link to Decatur for tele, not the newly built stations.
Thus, it looks like it doesn't effect the telegraph network, but must, instead, basically just serve as a function to reduce delay. It does work, for sure. Reduced delay in Chat, but also extended the "in connection with telegraph" indicator on the army up around Knoxville, which wasn't in connection before.
So acts like a node placed off the main line of a fiber line? I haven't tested it to see if they can be used to extend telegraph for additional telegraphs. I might test that somewhere out west. I'm guessing not. Which would mean it's basically there to fill in gaps.