The 670 trip electrically senses a locomotive or other load on the track. The diagram you show is for the crossing gate with bell. That accessory requires two "sensing" units, one to lower the gate (so it needs to sense a train while it's going by the gate) and one to ring the bell, hence the use of the 696, which sends an impulse with each wheel passing over it. The pinched wire is actually a wire that is soldered to the 670 track sensor. To throw switches, you need the 697, a completely different sensor that senses weight on the track, usually set so a locomotive trips it, but it can be set so just train cars also throw it. The problems with the 697 are: 1)track must be free to move up and down for about 30" (three track lengths) 2) the spring that the thumb-wheel pushes on to vary the amount of weight is needed to throw it is ofttimes bent out of shape by rough handling (Kids, remember??) or even broken. 3) contact points maladjusted or arced and not making good contact. IF the 697 fails in the "ON" or sensing mode, it can fry your switch coils--or it you leave a locomotive on it accidentally.
There are modern ways to do the sensing, and some of them are pretty reliable--but they all rely on a good switch motor, and a switch in good working condition (i.e.: it throws easily and quickly); this is not something that is true of all ACG switches--hey, the youngest one is at least 60 years old now!!! Heck, most of us don't move quickly anymore, unless really motivated (Homemade PIE--Ice Cream?? Where???).
BTW, the 697 can also be used to operate the semaphore & Sam, but again, misadjusted & it can fry the coils in either. Also, most semaphores don't operate quickly either!
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