Block signals were already present in the very first TTDX release, so they are by far the oldest type of signals. They have always been kept for compatibility reasons. Depending on the settings, they are not visible in the signal building menu, as they are practically not needed anymore.
Block signals can be built on a single tile in both directions. The two tracks to the left have signals showing "Go!", both as semaphores and light signals. The signals on the two tracks to the right show "Stop!", again as semaphores and light signals.
Passing
A train can only pass a block signal when it faces the oncoming train (and the signal shows "Go!"). When approaching from the back side the train will stop at the signal and turn around. Only if signals for both directions have been placed on a tile trains can pass in both directions.
Behavior
Standard signals show "Stop!" if there is a train in the signal block behind them. Thus there can only be one train in a signal block at any given time, which prevents any collisions. The behavior of these signals is rather easy to understand, however they are also quite limited when it comes to complex signalling tasks such as station entries.
The two signals to the left show "Go!", as their corresponding signal blocks are empty. The signal on the right shows "Stop!" because there is a train in the block behind it.
The calculation of tiles belonging to a block is straightforward: If there is any kind of rail connection, the next tile belongs to the same block. It does not matter whether trains coming from specific tracks can actually reach each tile of the signal block. In this example, trains on the topmost track traveling from right to left and trains running on the lowermost track cannot interfere in any way, as only the two lower tracks can be reached. Still, all six tiles belong to the same signal block, as they are connected by rails in some way.
This show the limitations arising from the usage of block signals: The train on the topmost track is (partially) inside the central signal block. Even though there is no way that the other train could possibly cause a collision, it has to wait until the first train has left the signal block. This limitation finally led to the development of path signals.
Usage
The only useful task left for them is the forming of signal blocks on rails which should be used in only one direction. The principle of such a block is the base for double-tracked networks and is explained there in detail.