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You guys have skipped right over the explanation for each light. And indeed, there will be three light sets when it's done, not just the two displayed.
The track diverges just beyond the bridge, with one track entering the yard and one track taking the main. I placed this signal where it can be seen from the passing siding just before the bridge, seeing as how it'd be too late for inbound trains to clear the main once they are under the bridge, if the yard is indeed sending something unscheduled [like a local] out of the yard.
The light to the left is the Main. The light in the middle is the Yard. These two are controlled by the Yard Nazi, seeing as how he's intent on controlling his yard and he's liable to use the main now and then when his yard gets too busy. The Light on the Right will be managed by Dispatch.
A green light on the Dispatch signal essentially means one may proceed on the railroad, while a red light means one must stay put, even if the main or the yard are displaying green signals. Dispatch may leave his light green at all times, or he may turn this light red after each passing train, turning it green only after the train has OSed,
The main purpose for turning it red, through, would be in the event of a large wreck or other calamity further up stream. Another option is that he may use this local signal to halt a train if there's something more coming down the pipes ahead [such as a hot express, a wreck train, or any unscheduled train not on the schedule] and thus use this signal to interrupt the regularly scheduled routes. Ideally, he'd have one of these signals at every passing siding throughout the route, but that is beyond the scope of this project at the moment.
Hence, as the signal currently displays, the main is clear but inbound trains do not have permission to enter the yard. Further, the Dispatch signal has been removed for maintenance, hence one would have to refer to their local orders to ensure they have permission to proceed [they must contact the Dispatcher at the OS station].
Incidentally enough, with the Main and Dispatch signals being on the outboard positions, it would not matter if you as the engineer knew right off if the green or red light was Main or Dispatch. If Dispatch displays Red but the Main displays green, and the engineer reads it in reverse [Main as Red, Dispatch as Green], he stops; if he reads it as Main displays Green and Dispatch displays Red, he still has to stop because Dispatch has not given him permission to run further along the route.
The center Yard light will always display Red until the Yard Nazi determines the inbound train may enter his yard, but even if he leaves it green the inbound train must stop and OS Dispatch and then notify the yard operator that he is coming into the yard, per operating rules. Further, since the yard master has control of the main signal, the engineer can always ask to verify that the signal reads as he thinks it read ["the main is red?"]. If the yard master tells him "no, the main is green," then the engineer knows the red signal belongs to dispatch and he has to clear it before he can move.
Hence, as an operator you really don't need to know if the main is on the left or if the yard is on the right, the yard is always in the middle and to use the main, both ends have to be green.
So that's how I set up the signal. It's logical enough even a caveman could understand it...