You haven't said what sort of signs which makes it a little more difficult but I am guessing you are talking mainly about small signs that people put on doors for bedrooms, workshops etc
I am a sign maker so most of what I do is what is probably classed as commercial signage dealing B2B, lots of rules & regulations that won't be of interest to you & mainly working with cut vinyl & digital print. Very little of what I do actually involves using my CNC machine.
There are lots of different techniques for the sort of thing you are looking to do but most of them centre around the post Mike has made, the important thing is to make sure the wood has been sealed to prevent bleed, doesn't matter what you are using for lettering, paint, stain or any other kind of product that could potentially soak into the wood
Lots of posts on finishing on the forum if you do a search, do a bit of experimenting yourself with different techniques to find out which works best for you, its mainly about using a font or fonts that are readable & using contrast between the text/graphic & the background.
Michael, is there not another bit to that Letter Visibility Chart ? The one I have starts at 1"