Is anyone able to comment on what type of signalling system was in place on this line and how it is supposed to work?
Essentially absolute block signalling with PZB90 (Indusi). This is the German version of AWS/TPWS (in that Indusi is one system but for UK eyes has elements we only know through TPWS). It has magnets and braking curves/timing built in so put simply you get clear (no intervention/acknowledgement needed), magnet energised for reducing speed for next signal (restrictive aspect) or a red (starts the braking curve/timer - though slightly different depending on if red or restrictive speed aspect). If you are not at the speed when needed at the magnet monitoring you, you will trigger an emergency application. Finally there is the magnet energised for a red so that will always be a stop within the overlap. If you imagine red awaited, then you will have the distant aspect red expected or Vr0 (frequently in Germany mounted on same signal as the main). You will get Indusi wanting acknowledgement - if too slow brakes come on. Once acknowledged you need to start braking and the braking curve/timer will monitor you and if you are not at the pre-programmed speed by the intermediate magnet before the red signal you will again get a brake application and should stop before the signal. If you are below the speed but continue onwards and through the red aspect (HP0), you will get a full brake application and by virtue of the speed will stop in the overlap.
As with here you can't release from a full brake application without agreement from the signalman etc. If all is working normally, clearly absolute block prevents two trains making it into the same block, and interlocking would protect such move with the magnets armed and signal for the conflicting move that has not been authorised not releasing.
The question therefore is what happened here. I understand one train was +4 down and so the timetabled crossing may have had to move. If you look at a map, the train from Holzkirchen towards Rosenheim would have not long left Bad Aibling (2 platform station with full signalling for passing) and had passed Bad Aibling Kurpark (a recently added halt). The other train would have left Kolbermoor (which again is a 2 platform station with full signalling for passing). So, clearly how did they both proceed onto the single track block between these stations when only one should have had the road.
I am not going to speculate, but something has obviously gone very wrong here and it should not happen.
p.s. see others got there quicker and with less rambling...