You only need one hot and one common from the transformer. The track voltage is being turned on/off from the connector. The connector works the same as a relay. There is the wiper which goes to the center rail in the controlled section and Normally/open terminal is left empty Normally/closed terminal has hot wire from transformer.
You need 2 153 contactors to make it work. When train 1 runs into Block1 the power is turned off to block 2 directly behind Block 1 thus stopping train 2 from running into train 1. When train 1 clears block 1 power is restored to Block 2 and train 2 can move forward. Block 2 is controlled the same way denying train 1 access to Block 2 until train 2 clears. The more blocks the smoother the operation.
The target signal has nothing to do with making everything work and is just candy for our eyes.