In its early days, the line thrived by serving the local farming and wool industries though, in the years following the First World War, this traffic gradually declined.

The route earned a reputation as a meandering rural branch; where trains trundled along, often flagged down by market-bound farmers' wives making their way across the fields to board the carriages.

The line enjoyed a brief resurgence in the 1950s, when the Royal Train traversed the route and other new traffic included Butlins through-specials taking holidaymakers to the new camp in Pwllheli.

Over time, the Railway has extended the operational length from one-mile to over 4+1⁄2 miles (7 km), as well as reconstructing original features at Bronwydd Arms station and amassing a collection of locomotives and rolling stock.

In April 1978, it re-opened the one-mile section of the Carmarthen-Aberystwyth route from its base at Bronwydd Arms, (3 miles (4.8 km) north of Carmarthen), making it the first standard-gauge heritage railway to operate in Wales.

[2] Trains on the Gwili start from Abergwili junction station on a site that is being constantly improved that currently houses 2 platforms, carriage shed, large car park, caffe and a booking office.

Typical features on the line include the gradients such as the 1 in 60 on the bank immediately north of Bronwydd Arms, the meandering River Gwili and the A484 road which are never far away and the wooded forests and sharp curves as the railway twists its way through the valley.

Llwyfan Cerrig (in English, Stone Platform) was a former quarrymen's halt and the Gwili Railway has created a nature trail which winds through the old quarry and emerges above the stock sheds.

[3] Restoring the line northwards has proven to be more difficult than the Gwili Railway had initially anticipated, volunteers' high hopes of reaching either Cynwyl Elfed or Llanpumsaint having been hindered by the cost of repairing a number of bridges en route.

There are a total of nine bridges between Danycoed Halt and Llanpumsaint, all of which are in poor condition and require extensive refurbishment to be made worthy for rail traffic once more.

An attempt was made in the early to mid 1990s to extend the railway by laying track southwards from the disused Conwil station site towards the railhead at Llwyfan Cerrig, but was frustrated by the escalating cost of repairing the three river bridges en route.

In 2011, over one mile (1.6 km) of track was laid on the southern extension to Abergwili Junction and work started to improve signalling and the level crossing at Bronwydd Arms for future passenger operation.