Rick's info is accurate, but might be a bit overwhelming for someone not familiar with electronic circuits.
Here are specific instructions on how to modify the board to hook up an external decoder.
As shown, cut the 4 traces at the black lines. That isolates the circuit from the brass contact strips in the car.
Install a short wire jumper (green line) between the resistor and the via (plated hole in the PC board).
Attach the common positive (blue) wire from the decoder where indicated.
Attach the the decoder's function outputs to the white and red LEDs as shown in purple.
This install uses the resistors included on the Kato board (560 ohms). But those might result in the LEDs being too bright. If that is the case, replace those resistors with 1000 ohm resistors.