At the dances I've seen/called in and around VT, we don't address this directly (with signs or such).
I've heard of the practice of sitting after declining, but I don't think it's a common practice for most folks these days. I'd say it's mostly fallen by the wayside.
The one time I've seen it come up at a dance was more than a decade ago when an older male dancer castigated a young female dancer for turning him down and then dancing with someone else instead of sitting out. Several folks told her afterwards that he was rude and impertinent and she hadn't been in the wrong. I wish we'd taken a stronger line with him directly too though. I don't know if she offered an excuse or just a no, thank you.
You are always free to say no when someone asks you to dance. You don’t have to give a reason; you can just say “No, thank you.” If you ask someone to dance and they say “No,” take it gracefully and move on. If someone has declined to dance with you, the etiquette in our community is not to ask that person again that same night. If they would like to dance with you, they can come ask you—it’s their turn to do the asking.
Adding that you shouldn't ask someone multiple times, but have put the ball in their court seems a polite nudge to folks on both sides
Incorporating some of the other strong suggestions that have come up on this discussion, I might advocate our group putting up something like:
You are always free to say no when someone asks you to dance. No reasons are required; a short "No, thank you.” gives that person more time to find a different partner. If you ask someone...
Thanks for starting this discussion Kalia! It seems like one that could have gone on the organizers shared-weight instead of callers; but this one does seem to be most people's default.