The app (locally, on your device) checks if someone from your contact list installed (became available) on Signal, and if they did, you get notified by the app.
And it shares your phone number with everyone in your contacts who has Signal installed.
Someone can get notified only if they already have you in their contact list (so they already have your phone number), and have Signal installed.
I still wish you could choose if you want others to be notified tho…