I've expanded my scope some, utilizing the idea of Arduino in further ways. I was toying with the idea of RFID tags.
I've also been looking into RFID tags. There appear to be 3 different kinds. Low frequency, high frequency and UHF. Many of the tags I've seen don't specify which of these they use.
I've been recommended some very small tags, about the size of a grain of rice, that are used as pet (cat and dog) chips. They come with an 'injector' (which we wouldn't need) and cost £3.00 (about 3.30 Euros) each. I'm trying to find out if they are low frequency types, whether they can be bought without the injector and if they are programmable or their code is fixed. I'll need over 30 of them for my automatic hump shunting yard.
Originally I was just going to use a simple reed switches. The idea was that I could have passenger trains that'd trip them and automatically pull into stations. I expanded this idea further though as I found too many limitations with such a simple system.
Depending on what scale you're working in, it's possible to use reed switches to identify a small number of different trains by using two magnets, at different distances apart, on each train. You wire the reed switches in series and if the distance between the reeds matches the distance between the magnets, both of them will be closed at the same time. You need only n+1 reeds to detect n different trains, as one reed is common to all the others.