It’s an old, low tech, pretty much foolproof way to make sure that trains don’t collide on a single track. It is generally used when the tracks ahead go down to having trains going opposite directions sharing one track. The train isn’t allowed to proceed if the engineer doesn’t have the token in their hand.
When they get to the other side of the single track, where there are two tracks again, they return the token to the station attendant on that side.
Here’s an article with more info: https://en.m.wikipedia.org/wiki/Token_(railway_signalling)
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