https://en.m.wikipedia.org/wiki/Lüttmoorsiel-Nordstrandischm... has a schematic of the track.

Looking at the map, it seems there are only two endpoints to the line on the island.

On the other hand, https://en.m.wikipedia.org/wiki/Nordstrandischmoor claims there are only 4 households on the island, so even assuming each has its separate fork, “each house” isn’t that much.

I wonder what system they have to prevent the two locomotives from meeting each other half-way through and to get one of the locomotives to a home when needed.

I've seen a couple of documentaries about how the inhabitants use that system. Though I forgot wether they have some signaling system, they do have passing loops (which they operate by driving there, getting out and manually perform the switch).

Also since the area is 100% flat eyesight should be enough.

Even without passing loops you could do it by simply swapping trains when you meet.

They use a marker in between the runarounds, and whoever reaches it first can pass while the other car needs to turn back.

There is no signalling, except for one marker in the middle of the longest stretch of single track rail between turnouts. Whoever reaches it first can continue, the other party has to go back. Though apparently, you can see whether the other car will be first, and wait.

Also, you don't really need forks, because are light enough to be lifted off the tracks. Some pull them up on special car trailers.

There are only a few houses (approx 15 residents) on the island.