Railworks 2 is an updated version of the original "Railworks" program which has been replaced by "Train Simulator 2012". If you have Railworks 2, you can update it to Train Simulator 2012 on the Internet using the "Steam" client automatic update facility. This free update does not include all that you get if you buy Train Simulator on CD.
The original Railworks was very buggy and crash-prone. Railworks2 is much improved in this respect. However, it like "Trainz", suffers from an inability to render detail in the scene from a moving train without jerkiness. Railworks has more ability to give you a jerk-free ride than Trainz.
Railworks is based on the methods used for the now defunct MicroSoft Train Simulator - MSTS - and it has similar limitations - however it is much better than MSTS in other respects. There are very good facilities for creating new routes and scenarios.
From the point of view of the cab or the trackside, Railworks does not provide you with any great advantage over MSTS. However, the potential is there to create much better and realistic representations of the railway than is possible with MSTS.
A very large number of routes are now available for Railworks - both in the freeware and in the payware category. These can be downloaded from http://www.uktrainsim.com/ and various other sites.
Railworks has polygonal people waiting for your train at stations. They walk towards your train and disappear. There are passengers sitting on your train, but they are not the same passengers who are on the platform. Steam engines have polygonal drivers and firemen. These are only visible in some views. MSTS has static characters on platforms which tend to look pathetic and frozen in time. Railworks polygonal people walk along the platform in a strange leisurely manner - they look as though they are going more for a stroll in the park than catching a train! Passengers seem very unhurried in this virtual fantasy world reminiscent of Connex South Central.
To drive a train, you have to choose a route and a train as you do on MSTS. The number of routes and scenarios is quite limited, but you can buy or download free many more, if you don't mind gobbling up the hard disk space. Like MSTS, Railworks has German, American and British routes which are all quite good. Most of the stations are the same as they are on MSTS. In some cases an effort has been made to make the station accurate and some of the stations are only inaccurate in a few minor details.
Railworks is more disappointing if you regularly travel on the route depicted, surrounded by polygonal people on their way to work just like you.
I won't go into any more details - don't want to spoil it for you!
Conclusion: if you have been using MSTS and have a high enough specification machine, then Railworks 2 or Train Simulator 2012 is the upgrade you have been waiting for.