Input matrix with reed switches
This application is not very demanding and you're you're going to be buying a lot of parts, so just buy the cheapest ones.  1N914 or 1N4148 diodes are usually inexpensive.
for the reeds shop around. you probably want glass ones as they are harder to bust than plastic ones.
Resistors are a good idea, you could use the arduino's internal pull-up but using a lower resistance  (like 1K) will help noise immunity, and an electroc model railways is probably electically noisy.
backing your table-top with foil connected to the arduino ground and running the wires below the foil will probably help with the noise too,