Once out on the mainline, the train will have to stop for red signals, slow down for yellow signals, and obey speed limits in various districts. Without transponding, you have to provide means of doing this by limiting track voltages. But that method is very limited because a certain amount of track voltage must remain for the decoders to operate properly. Of course, once the signal turns green again, the computer will need to resume that loco's speed. With a little imagination, I'm sure you can see how all this will work on your layout - where it could be used to advantage.
Most people use signal blocks.
That is, the blocks they've already divided the layout into for signaling, will also be used for transponding. This, however, doesn't mean that you can't divide it into smaller blocks yet. It's up to you to decide how your layout will be divided up, for only you know what you want to accomplish with transponding. The point here is, you can't call somebody else up and ask them where to put the gaps. The block detector to use for this is the Digitrax BDL16 .