Imagine 2 engines, one on the diverging route and one on the through route, both facing the frog of a switch. When looking at a switch from the direction that 2 lines merge into one, dwarf signals facing each line tell an engineer if the switch is set for safe passage for that train. Only one should be green and the other should be red.
Conversely, for any train entering a switch from the points side, the dwarf signal basically tells the engineer if he is passing straight through or following the diverting track. (In my personal opinion, the dwarf on this side should show green (for the through) or yellow (for the diversion), not red (which should only be for a true required stop).) Anyway, the signal should always match up for the position of the switch to be useful, and that's why most people prefer automation.
You haven't said why you prefer a separate switch to operate the dwarfs, but I'm guessing you will be using command control FasTrack switches. Then you will need a common wire for each signal (probably can all be combined) and a separate power wire for each color on each dwarf. The "power" switch should have one line in and two lines out (one for each color) so that flipping the switch changes the power feed to the color as you desire.
Chuck
