So, on the basis that I am using reed switches, my choice boils down to running loads of wire back to the transformer or buying switch decoders, correct?
Simple terms, yes..
DCC track-power is both the supply, and the control to the loco's/decoders.. The decoder interprets the control signals, and if for that particular loco, then the command is acted upon.
For a point (turnout) you use an 'accessory decoder' and this then controls the point motor in your picture. - Or operates your signal, same motor.
You can use a reed switch to 'tell' the decoder to operate the point/signal, but will also need some way to reset/ change this back, at some point.
If you get clever, you could get the point to reset after a certain time?
For DC, you can derive the power-source locally from the track. - There is always power on a DCC track.
You would need some local electronics/intelligence, to act on the signal from the reed switch, and to reset the point/signal later. THis could be housed locally, in some-sort of line-side hut, if you wish?
PhilP.