Electronic – How are multiple signals propagated in a coaxial cable

The thing to realize is that all electrical phenomena are governed by Maxwell's equations, which describe the relationship between electrical and magnetic fields and how they affect each other over time.

However, in many cases, we can analyze circuits using what's called the lumped circuit approximation. This is a set of rules that can be derived from Maxwell's equations. These rules apply when the circuit is small enough that speed-of-light delays from one side of the circuit to the other are insignificant. Kirchoff's voltage and current rules are the main tools for analyzing circuits in the lumped circuit approximation. I think these cases are what you're talking about when you say you're familiar with "a normal 2 wire system" where "ac current just flows through the conductor".

We start talking about transmission lines when we have a conductor (and return path) that are long enough that speed of light matters. To analyze transmission line propagation, we use a different not-quite-so-simple simplification of Maxwell's equations called the telegrapher's equations. The solutions to the telegrapher's equations describe the propagation of signals on transmission lines. A full description and solution of the telegrapher's equations is more than I can write here, but you can read more about them on Wikipedia, for example.

The gist of it is, as you've probably learned, energy is transferred back and forth between electric and magnetic fields. The important electric field is the one created by the potential difference between the conductors, which extends through the dielectric medium. Similarly, the important magnetic field is created by the currents in the conductors, but the field is actually found in the dielectric. In the telegrapher's equations the electric field effect is represented by a "distributed" capacitance and the magnetic field by an "distributed" inductance, which lead to our typical characterization of transmission lines by capacitance and inductance per unit length, which combine to give the characteristic impedance.

It seems like your question is about data transmission, so I'll try to answer it in this context.

You can't transmit information on a single frequency, because technically "single frequency" implies that the sender is turned on forever. As soon as it is switched on/off (corner case of AM) additional frequencies are added. For example a 1 MHz carrier switched on/off (this is called on/off keying or OOK) at 1kHz causes two sharp spikes at 0.999 MHz and 1.001 MHz in the spectrum. The difference between the highest and the lowest frequency is usually called the bandwidth of your signal and in the case of OOK it is twice the modulation frequency. The max. data rate would be 2 kBit/s, because the highest frequency sequence that is possible is 1010101....

If you want to composite such transmission systems onto a shared medium (cable, air) you need to make sure that they don't overlap. in the above example you could place additional transmitters at .998 MHz, 1.002 MHz etc. A practical example is FM radio, the stations are separated by a couple of 100 kHz for this reason.

Multiplexing is about combining N serial bit streams into one with a N-times higher bitrate. Lets say that you want to multiplex 10 2kBit/s (example above) bit streams into one with 20kBit/s. The bandwidth of the signal is than 20kHz and the transmitter will occupy the same amount of spectrum on your shared medium as ten individual transmitters.

At this point, I recommend you to learn more about Fourier Transformation and Shannon Coding Theorem, it will help you to get the connection between time and frequency domain in a data transmission system.