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Here is my take:
A simple crossroad can have traffic moving in 8 possible combinations:
1. Curve paths: East->North, North->West, West->South and South->East (first is the inital direction of motion and second is the direction after making a curve).
2. Straight path: All four directions.

Out of this two can happen at the same time:
ex: North->West and South->East and also in heading east and heading west can flow at the same time.

Thus out of eight combinations we have to decide only among 4 combinations, this is similar to a 2 bit problem where the state can revolve around four possible states:
00
01
10
11

Yes, more complex things can be incorporated as changing the interval to avoid congession etc. But this can give a head start to solve bigger problems :)..

No NO NO And NOOOO... you can not. There are complex parameters here, example Poisssion dist...which needs to be taken care of to stop clogging traffic, also need to have a feedback mechanism. Just not easy to design it.

All the 4 bit integer values where the number of 1s need to be 2 only.

A cross road would have 4 roads at the intersection viz North (00), South (11), East (10) and West (01). These roads can be represented in binary format as represented in brackets.
The 4 major conditions to be active simultaneously are

1. NS and SN
2. EW and WE
3. NW and SE
4. ES and WN

if we consider the binary representation of the above conditions then
we get
1. 0011 and 1100
2. 1001 and 0110
3. 0001 and 1110
4. 1011 and 0100

Thus at any point of time the negation of the binary representation would be active at that time simultaneously

Please refer to :
ccs.neu.edu/home/vkp/Papers/Traffic-sigcse98.pdf

The solution given here can be extended to multiple lanes. Here are the basic classes :

Road
Place
Vehicle
TrafficSignal

If there is necessity for implementing pedestrian crossing, then we need two more classes: PedestrianSignal and Pedestrian

A road will have a set of places. Each place will have the link to next place in the valid direction. The place will maintain a queue of vehicles. Vehicles can be identified by their licence plate and make. Traffic signal will have three states, Red, Yellow and Green. The state transition will be based on a timer. There needs to be 4 signal objects to represent a 4 way intersection. Whenever the signal goes green, the cars can be dequeued from the place in the direction of the signal one at a time. When the state changes to red, the dequeue operation has to be stopped. A vehicle has to queue itself in the Place in direction where it wants to travel.