Planning Stage
Begin by coming up with an overall vision of what you wish to build. Do you want a traditional design, or will something more original do the job? Choose a scale for your railway early on. The scale may be limited by the space you have as much as by the vision of what you want to create. HO is the most commonly used model scale with smaller models available in N scale and larger available in O scale. Take a look at the space you have set aside for your model railway and choose accordingly.
Once you've chosen the scale, plan the layout of your design. This should be as detailed as possible, noting not only the track layout but all the mechanicals, including wiring. You should lay out your proposed scenery elements during this phase as well. While you can do the layout design entirely on paper, computer software packages can aid you in the process. Some can even give you virtual tracks in your proposed scale to lay out on a virtual table to get a real idea of the parts you'll need. You can even plan the wiring and have the completed layout displayed in 3D before printing out a set of plans from which to build. A few of the software packages you can use for layout design are 3rd PlanIt by El Dorado Software and AnyRail by DRail Modelspoor.
Layout Design
You should consider two basic choices for layout design. You can go with a shelf design, which consists of a small switching layout located on a shelf. These can be several levels high and though they don't take up much space in a room can still be quite detailed and complex, depending on your tastes and the time and effort you wish to put into your design. Or you can go with a large wall-to-wall or central-table setup. These designs can dominate a room and can be as large as the space you have. The most complex designs use this layout format, many running multiple engines and allowing for multiple engine operators in control.
Themes
For a really stunning model railway layout you, should choose a consistent theme to build from. The mechanicals and construction of your railway will be the most time-consuming, but it's the overall look of the model that breathes life into your railway project.
You can choose to go with a traditional theme, matching the train model with the scenery by location and date, aiming for a realistic setting. Or you can go with something a bit out of the ordinary, perhaps setting the story of your scene that requires a mix of genres or creating something completely original. Setting the theme of your model railway and creating the scenery is a way to allow your artistic vision to shine through and put your personal stamp onto the creation.