I think it can be effective in just about any scale, especially where what was originally at a site is mostly or completely gone. Dennison, Ohio's depot museum has one in N-scale, to fit in the space available, and it does a decent job. What does not work is when it's done as a local club layout with absolutely NO consideration as to making it look like the original location, or consistent time period or railroads represented. I am specifically thinking of the model display at the Marion, Ohio Union Station, where just about anything goes as to equipment allowed to operate. It doesn't really teach much of anything. It's a plaything for the members. And it's a shame, since they do other things very well, like their display of interlocking and signaling equipment.

The Marion Model Railroad Club layout in the building on the east side of the station predates the museum by many decades and was designed to provide for club operation and fit the building space rather than to depict anything at Marion Union Depot (MUD). Many of the structures and features were the work of Joe Slanser, who also had an enormous home basement HO scale layout that depicted many features of the Erie Railroad in the steam to diesel transition era.

PC

And then you have something like this:
https://www.historictrains.org/traintopia
which is kinda in its own category. I was there as a VIP and didn't go though normal ticketing but if I recall admission to Traintopia is separate from the MAR tours admission.

Not at the one I crew at, at Chehalis, WA.
For a while in the past, a model train club had a layout set up in a boxcar sitting nearby the caboose that was used for a ticket office.
Since then, I assume that club is the same one that now has a decent sized club layout in the old NP depot across the highway. We now have an old, small depot as the ticket office. There's no room for a model railroad in there and frankly, we don't have the time, the funds nor the people to build and service a layout. And I fully support that, as I'd rather some effort that might otherwise be devoted away from the 1:1 scale stuff to stay where I think it should remain. We're more of a 'train ride' anyway than a museum in the classical sense. The public wouldn't be seeing such a layout for a few chunks of the year anyway when we're closed (as we are right now, due to tack issues from a January flood, though we're supposed to be running Easter trains this spring).
And for the majority here who don't know me well, I'm an avid model railroader (I model the ET&WNC in On30) who has been published in most of the magazines in the hobby since 2018.

I remember getting to see the layout after sitting on the steps of the tower to photograph N&W 611 during it's first preservation era run. At the time, I believe the depot was empty and the layout was open since club members were there to watch the steamer and invited us over.

Bob

The most popular exhibit at Los Altos History Museum is an O-gauge "animated diorama" of downtown Los Altos, California, in 1932 - back when it was known for apricot orchards. The display visible to the public is about 24' long, with reversing loops hidden behind the scenery backdrops. When you enter the exhibit, the lights are very dim. Pressing the big red START button starts the sequence: lights slowly brighten, a rooster crows (great sound effects), and the sound of a chugging steam locomotive gets louder. The S.P. commute train pulls into the station, stops with appropriate sound effects, the conductor shouts "All Aboard", and the train leaves. Then a similar sequence with the Peninsular Railway interurban car. Every kid in town loves this.

The layout uses 3-rail O-gauge, which makes the hidden reversing loops easier to handle electrically. Scenery etc was built by the late Bob Brown (editor of Narrow Gauge & Shortline Gazette; he lived nearby) and probably others, with the S.P. commute train and Peninsular Railway interurban car customized by local residents Fred and Tom Vertel. Automation was done by a team led by the late Bob Grimm (also a local resident, former chief R&D engineer at Hewlett-Packard).

This teaches a lot, is quite accurate historically, and is the opposite of the "spaghetti bowl of tracks" approach. It has also proved to be maintainable for many years now.

- Doug Debs