If the sensor in X is broken, then the server will say "I cannot prove it is safe to move through X", and the train will stop.
I'm not a transportation engineer however, so I'll defer to anyone with actual experience in the field. But the idea is that our sensors are so effective today, that it is better to "prove" each leg of the journey is safe with "positive train control", rather than the opposite normal approach. (Ex: Sensor detects a problem, which stops the train).
That is to say: all sensors in the USA are in positive-train control mode. Trains will therefore stop if any sensor malfunctions. We're now in a "default stop" state for all trains, unless those sensors are working, deployed across USA.