The control station does add data to the rail voltage. The data contains an address and an instruction, with the address specifically targeting one particular device in the model (train A, track switch x or whatever) and the instruction telling the decoder in that particular device what to do (speed up, turn lights on, play sound, …).
Each decoder in the system will only react if it sees a data packet addressed to it. The data is encoded onto the tracks, as you mentioned, by having pulses of different duration for ones and zeroes.
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