The usual arrangement for tramways that I've seen is pretty much the same as at many road crossings. The "train" still runs on the top surface of a track, but the "roadway" is brought up level with the top of the rail to minimize the bump when other vehicles cross. The "groove" is just enough of a slot for the flange of the wheel to run in, but the train/tram load is still carried by the top surface of a steel rail.

There could be variants that I haven't seen; but the impression that the tram runs in a groove is a bit off from my experience.

The requirement for the flange on the railroad wheel will be quite obvious to anyone who's tried riding a bicycle down a rail - as kids in my neighborhood tried to do quite a lot (with little success, although a few kids got so they could make it 50 yards or so on a good day). [Note: modern kids aren't generally permitted such entertainment, but in case you find one trying they should be sternly warned to never try it if the track or the bicycle tire is even slightly damp. - - voice of experience!]

John