That was the NYC Western District (LS&MS) freight yard. Sandusky did not have a passenger yard as such as no equipment / psgr trains had Sandusky as a terminal. At one time, the Southern District (Big Four, nee-Mad River & Lake Erie) did have psgr trains originating / terminating Sandusky, but those ran to and from the waterfront.
As the NYC consolidated operations, the Southern District freight traffic was added to the Western District yard.
If you scroll the map to the west, you can see Bay Jct. (CP-242). This was the crossing of the LS&MS with the PRR (CS&H), Big Four, and NKP (LE&W). The Big Four and the NKP also crossed the PRR here. The LE&W Yard was west of the west end of the NYC yard, probably because of the onetime NYC ownership of the LE&W.
If you scroll the map to the east, you can see the old B&O Jct. at CP-242. This was the original B&O mainline, and it went through the east side of Sandusky down to the waterfront. East of CP-242, there was an NYC connection to this line which gave the LS&MS access to the waterfront for transfer of summertime excursion passengers to the boats to Cedar Point and the Lake Erie Islands. Lasdt passenger use of this trackage was a B&O excursion using RDC's in the early 1960's.
For many years, we had a very small lift bridge over an inlet on the waterfront. No tower, just the interlocking controls on the ground.
Thjere is a state historical marker at the waterfront commemorating the MR&LE and the original B&O / MR&LE enginehouses at that location.
Hope this helps.