There's a lot to unpack here and I'm not entirely sure what you mean by some of it, but I'll try my best to explain what I can.
First, with a few exceptions, it is generally very simple. There always needs to be a block brake between one train and the next. That way, if something happens where train A doesn't complete the circuit, then there is still a block in between train A and train B that can safely bring train B to a stop and avoid a collision. So, the controls program will keep track of when a train has passed through a block. If train A hasn't reached/cleared a block at the time train B is in the block behind it, then the program will trigger the brakes in that block to stop train B.
...or B&Ms with their combined-but-not-the-same service & safety blocks.
A lot of the B&M inverts have excessively long brake runs that obviously include maintenance areas. A block only needs to be as long as the space required to safely stop a train. So, when you enter the brake run, the space needed to stop the train can be one block. After that point, the track can be broken into blocks based on the length of the train, so it's possible to create a series of blocks in the same straight length of track and stack all of the trains.
I'm particularly curious about smaller, early-to-mid 90s B&M inverts. I've read somewhere that the way they behave prevents a train from being dispatched from the station until the next two blocks are empty - both the lift and the service brakes...
I'm not sure if that's true, but if it is, then that is strictly a safety preference by B&M and/or the controls engineers they used.
and I'm also not entirely sure about what happens in regards to lift creep on these older models. I've heard Dragons introduced lift creep to B&Ms, however I don't have any reliable means of backing this up.
Do you mean how the lift hill starts out slow with a train on it and then speeds up while a train is on it? Obviously, Dragons featured that for the sake of trying to line up interaction points between the two trains. I can't verify if that was B&M's first use of it. On more standard applications, the concept is that the lift hill is obviously a super long block and the train will only reach the end via the lift itself. So, you can dispatch a train onto the lift theoretically before the block after the lift hill has been cleared. It's advantageous to run the lift motor slowly to give the train ahead more time to get through the block. Once the train ahead clears the block, then you're good to go and the lift motor cranks up to its normal speed. And if the block never clears, then the lift will shut off completely once the train reaches the prox sensor at the top of the lift.
I hope this is of some help and answers your questions. My apologies if its too confusing or too simple. I'm happy to try and answer any subsequent questions you might have.