It’s confusing to me as well, haha! I can only speak to the loop controller I use, the PSX-AR from DCC Specialties. So here goes, in layman’s terms, cuz it’s all I got (but Dan & others will correct me where I’m wrong).
There’s a track section in the middle of the loop that the controller is controlling (vs. the entire mainline). The controller has a pair of wires coming from the loop’s entry and exit legs, and a pair going to the controlled section. When the train enters the loop, and the first metal wheels cross the gap to the controlled section, the PSX unit immediately brings that middle section into alignment with the phase of the entry leg. Each additional par of metal wheels tell it to do the same thing, but since all is in alignment those redundant “commands” don’t do anything.
When the loco comes to the gap at the end of the controlled section, there’s a little spark and the PSX unit flips the phase of that section to align with the exit leg of the loop. Further metal wheels do the same, but again to no further effect.
However, if your train is longer than the controlled section of the loop, your end cars’ wheels may be telling the PSX to align one way, while the loco is doing the opposite. Then you get a short. That’s why your return section has to be longer than your longest train.
Hope that helps,
Cliff