In order to answer the question of what it means that a fabric is railroaded, we first have to talk a little bit about how fabric is made. Typically in our industry, fabric is woven in 54", 66" or 72" wide, and comes on a roll. Upholstery fabric is typically 54" wide, vertical surface fabric like panel fabric and acoustic fabric is 66" and cubicle/privacy curtains are traditionally 72".
If a fabric is railroaded, that means it is sampled or applied to the furniture with the roll turned 90 degrees. Because you are using smaller strips of fabric, as long as the roll is wide, the term "railroading" is used, like the ties of a railroad track.
There are a couple reasons an upholstery or cubicle/privacy curtain or panel fabric will be turned 90 degrees when applied. One reason is simply aesthetics. There are some patterns that have been designed to look better visually when they are turned. It doesn't have any bearing on performance. It's just an aesthetic choice. The other reason a fabric could be railroaded is in order to use less yardage per piece of furniture or to avoid seams.
If a fabric is used vertically, or the way it comes off of the loom, it is called "up the roll". The distinction of whether a fabric is railroaded or not doesn't have huge implications when choosing which fabric to specify, but definitely plays a factor when determining how many yards are ultimately needed for a project.