Your concerns are real, but unfounded. The switch operates on low voltage DC. The AC is converted internally. The voltage actually traveling to the switch controller is +5vDC and a -5vDC to light the colored LED indicator lamps via the yellow wire.
The switching motor power (a small DC motor) is controlled by the board. The board controller is switched by the red, green and black wires. The controller lever only changes which circuit on the board is activated by mechanically momentarily contacting the green/black and red/black.
Finally, there is only milliamps of current flowing, which would be what one would have concerns about when considering wire size.
Yes, there is 18vAC on the track at 10amp potential on the track. The internal switch boards are designed to handle that and convert it to only the small DC power that is needed.
They do not require anything close to the amperage required by coil motored turnouts(switches)
You can email forum members CJack, gunrunnerjohn or SantaFeFan if you want more detail. They are a few of the forum's electrical experts.