Back to the OP's topic. I am an extreme novice.
Pin 1: self explanatory
Pin 2: is receiving signal from V2 ( the bcm outputting a pulse width signal or a constant 14v signal). It is also receiving current from Pin 7 AND from Vdd, via R1. I am not sure what the signal from Vdd is doing.
When the TRIG input is pulled below 1/3 of Vcc (4V), the 555 is "triggered", meaning its OUT pin goes high (near 12V), and the DISCHarge transistor (pin 7) is turned on, discharging C3 to near ground. This happens as long as the PWM input is low...
Pin 3: This is the output that outputs 12v? when Pin 2 goes "low" (less than 1/3 Vdd?), otherwise it outputs nothing? when Pin 2 goes "high"
It outputs either almost 12V (high) or almost ground (0V, low). It can source or sink about 200mA
Pin 4: tied to Vdd to prevent accidental reset...
To disable the RESET pin, i.e to prevent it from doing anything...
Pin 5: Left open. Why is this not tied to ground via a capacitor?
You can if you want to. The simulator doesn't care. A real 555 might.
Pin 6: Threshold: Receives signal from what appears to be Pin 7 and Vdd via R1. Again, not sure what's going on here.
When the PWM signal goes high, the RESET condition goes away, turning off the DISCH transistor. Now Diode D1 is reversed biased (blocking), so the timing capacitor C3 begins charging through R1. If another PWM pulse comes along before the voltage at Pin 6 THRS reaches 2/3 of Vcc (8v), then the 555 is triggered again (re-triggered?). If PWM stops high, then the 555 times out, Pin 3 OUT goes low, the lack of PWM is detected, job is done...
Pin 7: Outputting signal to Pin 6 and to Pin 2. I understand this pin also works as an auxiliary output. When Pin 2 goes High, Pin 7 goes low?
See above.
Pin 8: Takes in Vdd.
Question:
What is the other side of of C3 and C2 hooked to? Ground?
All the upside-down Δ symbols are ground, and are all implicitly connected together. Just short-hand in lieu of connecting them all with expicit wires in the schematic.
So how does the OP use this then to trigger Light A when the PWM signal is on, and trigger Light B instead when the PWM signal disappears? Im sure the answer is right in front of my nose but I just can't seem to totally understand the process.
Help?
The 555 OUT pin3 is capable of sourcing or sinking about ~200mA. It can drive a small 12V relay directly (with a snubber diode across the coil), or by adding a NFET or PFET transistor used as a power switch, could switch 10s of A.
Here is a similar circuit that shows the 555 driving a relay.