Mannyrock,
Regulation is a word that describes the ability of the power supply, in your case a train transformer, to hold its output voltage steady as the load varies. Normally you'd use it to power track. As the locomotive on this track moves around the layout the amount of current it draws out of the transformer will increase and decrease; increasing when rounding curves compared to travelling straight, increasing when climbing grades as opposed to flat, increasing if pulling more cars as compared to pulling fewer.
As the load goes up and down, the current follows suit. If the transformer (power supply) is well regulated the voltage it puts out to the track will not change very much with changing current draw. You set throttle, the voltage on the track gets set, and it doesn't go up or down significantly once it's set.
As was implied your sensors will work best with a well-regulated supply. Apparently your N Gauge transformer is "well-regulated" enough so as not to cause problems. It's output apparently is steady no matter if the load current goes up or down.
Now if you think about it isn't that what you want? Steady output voltage from a train transformer means less speed-up-and-slow-down going around the layout. A regulated supply doesn't eliminate all voltage variance when you're powering trains, because you still have the voltage drop in the tracks to deal with, more over some sections than others, but does help. To help fix the track contribution we use additional power feeds (drops) around the layout.
Back to regulation. It works the same way with sensors.
You're fine.
BTW -- Regulation is common with DC supplies; it's harder (more expensive) to do with AC.
Mike
