I don't know about on the narrow gauge but when I was a brakeman on the Frisco, cars in local (way freights) the cars were blocked in station order
i.e. the closest town at the head end and the farthest away at the rear. One possible exception was if the train contained a hazardous material or shiftable load, they had to be placed in the train with some other cards as buffers to keep them away from the engine or caboose. The number of cars required between the load and the engine/caboose depended upon the hazardous load itself.