Hi Bob and Welcome to the forum, you'll enjoy it here I'm sure!
As W.S. above says the locomotive is an HOn3 which runs on track that is narrower than standard HO but considerably bigger than N guage. The HOn3 equipment is smaller than HO standard gauge equipment in most all cases too but much bigger than N gauge.
HOn3 trackage is True Narrow Gauge and by getting involved you belong to a somewhat
elite group of modelers who go to considerable lengths to recreate scenes as encountered on the D & S, D&RG, D&RGW, C&S etc. Not that us standard gaugers don't try and be detailed too.
The best source for HOn3 track, either flex track or the rail, ties & spikes if your going to start hand laying your track like I do is Micro Engineering in Fenton, Mo.
http://microengineering.com/ as they produce some of the best stuff available. I'm in the process of trying to get reistablished with them to be able to offer their line for resale in the near future. There is nothing that looks as real as hand laid code 7o or code 55 rail on wood ties for an HO/HOn3 railroad IMHO, not that flex isn't. I have various shots on the site here showing my HO layout, although a long way from being done, and I may dual gauge a portion of it as I have some HOn3 equipment myself, I just need to determine where I might fit it in and the mines I'm about to try and fit in might just be the places to utlize HOn3? Actually I have a shot of a little Brass HOn3 Saddle Tank Loco in amongst my shots too.
Just as with the prototype HOn3 will be able to handle tighter curves than std HO so you'll be able to fit any given HO track plan into a smaller area or if designing your own you'll be able to fit more in a smaller space. But due to the fact your dealing with HO gauge as far as the size of the people and buildings you still need to allow for much more room than N guage. So the space you have for a layout will somewhat determine what you can do and which way you want to go.
Now, if your dead set staying with N gauge there is Nn3 available too but the cost is probably as much as HOn3 and maybe more?
There's a very well done Magazine, 'Narrow Gauge and Short Line Gazette' which I've subscribed to for years and is full of information and plans on how to build various things.
Hope this has been a help to you.