A yard is a set of tracks in a town. Like industries, freight cars can have their current location be a yard, and like industries, cargos can have a yard as a source or destination for a load.
SwitchList treats yards specially in two ways. First, all trains must start and end in a yard. Second, empty freight cars without a cargo assigned will be returned to the nearest yard that accepts them.
Not all yards are visible and on the layout. On my Vasona Branch, two of the three yards are actually staging tracks. Trains start and end on those tracks, and most freight cars are returned to staging when empty.
Because yards serve as the final destination for empty cars, they also are used for interchange tracks so empty freight cars for the owning railroad can be sent there. On my Vasona Branch, all Western Pacific cars get returned to the WP Interchange because it is the only yard on the layout that accepts empty WP cars.
Divisions for Cars and Industries to learn about using divisions to set the destination for empty cars.
User Interface: Yards to learn how to specify a yard.