Monday’s breakdown on the North Shore Line disrupted some 50,000 passengers going to work that morning. Trains did not run between North Sydney and Chatswood until 10:30AM, and there were no trains between Wynyard and North Sydney until 8AM. Buses lack the capacity of heavy rail at the best of time, let alone when a section of the rail system shuts down unexpectadly, and buses struggled to deal with the huge numbers of passengers getting off trains.
However, the disruptions were not limited to the North Shore. Trains on the Western and Northern Lines that normally pass through the North Shore Line saw delays throughout the morning. And it was these delays that saw flow-on effects to other parts of the network, to the South, Inner West, Bankstown, Airport/East Hills, and Newcastle/Central Coast Lines. This is because trains on these lines run on the same tracks at various points in the network. The Illawarra/Eastern Suburbs Line, which operates on completely different track to the previously mentioned lines, was not affected.
This separation of lines, operating on separate tracks to prevent delays on one line from spilling over to another line, is known as sectorisation. Cityrail has 3 sectors: Sector One (the Eastern Suburbs/Illawarra Line), Sector Two (all lines using the City Circle), and Sector Three (all lines using the Harbour Bridge). The problem is that trains on sectors two and three share track between Granville and Strathfield. This is despite there being 2 pairs of track along this section of the network, meaning that sector two trains and sector three trains could easily run on completely separate tracks. Word on the street is that the timetable update later this year will do exactly that (more on this next week).
Trains from different lines use the same track between Granville and Strathfield, meaning that delays on one line lead to delays on other lines. (Source: Cityrail)
Doing so would not have prevented the faulty wiring that shut down the North Shore Line and led to delays on Monday. But it would have quarantined these delays, preventing them from flowing on to lines that run into the City Circle.
Transport Sydney 
The train that I was on that morning (I was going from Rhodes to North Sydney) was diverted onto the city circle. Doesn’t that mean that even if you separate the 2 pairs of track from Granville to Strathfield, the trains that are coming into the city somehow still need to be diverted onto the city circle, meaning traffic would be delayed anyway?
The train from Rhodes was able to be diverted to the City Circle exactly because City Circle trains had already been delayed, so doing so would not have created disruptions that did not already exist.
If the lines had been separated, then I very much doubt the diversion would have occurred onto the City Circle. Though that train could easily have been sent to Sydney Terminal at Central Station instead, where you could change to a City Circle or Eastern Suburbs Line train, either of which would be unaffected by the delays on the North Shore.
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