In this sentence, what is the meaning of further up the train?
I did not see the lady again until the following day, when both she and I got on the next train from Dresden to Ruritania. She was further up the train, however, and did not see me.
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"Further up" quite literally means higher; it is very frequently used to indicate that something is "closer to the top" (as in further up the mountain). In cases where the object being referenced is horizontal, the "top" of the object will be its head or front.
In the case of a train (clearly a horizontal object), the front is the engine; further up the train is therefore somewhere closer to the engine.
Look up this meaning of further up in the Oxford Dictionaries:
2.1 Beyond the point already reached or the distance already covered:
Amelie decided to drive further up the coast
In the given context:
She was further up the train, however, and did not see me.
The sentence implies that the lady was towards the beginning (so to speak) of the train, ie. near the engine. That's why "further up the train" is used.