The BD-20 block detector module is normally used to indicate the presence of a locomotive, caboose or other rolling stock in a track section by sensing electrical current drawn by that rolling stock. Locomotives will naturally trigger the detector because they draw current through their DCC decoder. Unpowered rolling stock will not trigger the detector unless equipped with some means of drawing current from the rails such as lights or resistor wheel sets.
The BD20 needs to be as close to the section being detected as possible to avoid false detection triggered by long runs of cable. For the BD20 to work correctly ALL feeders for the section being detected must go thru the BD20. The best practice is to have one BD20 per feeder, and only one feeder per section of track. That section should be isolated from all other sections by using gaps or insulating rail joiners.
The BD20 acts like a normally open switch that gets triggered by sensing current going thru the coil. In a typical application you connect the outputs of the BD20 to something (Logic + 5 to 12vdc) that will react to a ground short. we use it to trigger the inputs of the AIU. Most signal systems work the same way.
The BD20 is a detection device and cannot drive a signal directly unless you want to use the external LED connection in some fashion. An AIU is an input device that detects a 5v line being shorted to ground, such as the output of a BD20. The AIU then puts this information on the NCE Cab Bus. Neither device (BD20 or AIU) are directly related to signaling. They do detection and notification.