I'm going to throw some controversy here: I think that most LEGO layouts are not 'model rail', but I think that LEGO can and sometimes is be used for 'model rail'.
To be more precise I think that an important aspect of 'model rail' is the 'model' side. It's not just the trains that represent reality, it's the landscaping, geometry, buildings, vehicles and other accessories. To have a true 'model railway' you need to have a good go at most of these elements. The same attention paid to the trains must be paid to the cars, the trees, the roads etc. Most LEGO layouts don't go this far.
But a very few do :) I'll not exaggerate the controversy by linking to those I believe meet the criteria.
Tim