That sign used to be attached to the Gold Trails hotel, which housed the Covered Wagon Show on it's ground floor. This was a diorama show (actually a "cyclorama" because of it's curved painted backdrop) that told the story of Walter Knott's grandmother and mother as they journeyed west across the desert in a covered wagon.
Here's the Gold Trails hotel as it appears today. Unfortunately, when the hotel was rebuilt in the nineties, the Covered Wagon Show was replaced with a gift shop.
This photo and description of the diorama is taken from a souvenir Chicken Dinner Restaurant menu and used here with permission from Connie Moreno who originally posted it on her "Life is a Journey" blog. To see the full souvenir menu, as well as some great Disneyland trip reports, click here: Life Is A Journey.
Here's the show's original concept art painted by Knott's artist, Paul von Klieben.
And here's a vintage ViewMaster shot showing the diorama after "nightfall."
If you look closely at the previous three photos, you will see a man on a horse next to the covered wagon. He was the "scout" that had gone out ahead of the wagon train in search of water (Ma, I'm thirsty!) Well, the diorama is long gone, but this figure still exists at Knott's today! He can be found inside The Pony Express Outpost/Museum, which is located in Ghost Town between the Wilderness Dance Hall (Jeffries Barn) and Boot Hill.
Some of you may remember that blogger "Outsidetheberm" wrote an absolutely incredible post about the Covered Wagon Show a while back and included a word for word transcript of the show's soundtrack. Unfortunately that post is no longer available on his blog, but I'm hoping he will repost it someday (hint, hint!). He is the one that actually tipped me off about the existence of this figure (thank you, OTB!) after I asked him if any of the props from the show still existed. It just took me a little while to find a time when the museum was open so I could check it out!