On a model railway third rail electrification means that the driving wheels on either side do not have to be insulated from each other. In practice this has not been a problem except when rolling stock that is not insulated is used.
For modern systems insulation is not a problem and there is only one situation where rolling stock that shorts the line circuit occurs. This is when live steam models are used on electrified track. While it is possible to insulate model live steam locomotives, it is complex and prone to problems especially with water being a conductor.
The type of railway where this situation arises tends to be those laid outdoors in the garden. Where steam and track supplied power are to be used together a third rail system is nearly essential. While a third rail could be used, or only models using an overhead collection system, in practice the stud system has certain advantages.
Studs are laid at regular intervals down the centre of the track. They are connected electrically and insulated from the running track. A flat ski collector under the loco that is always touch at least one stud acts as the collector. Because the collector acts on a small area, the stud, the action of the collector is to clean the stud. This ensures the system has good electrical contact. This means the system works well even on track covered in oil, sand and the general detritus of a garden railway.