A more complete coverage of the "telegraph" systems before the electrical telegraph is in The Victorian Internet
by Tom Standage (ISBN 0-425-17169-8). Per the suggestion of a friend, I borrowed and read it.
Rather than the telegraph arms having 9,999 possible positions to define the individual words, most of the many different systems transmitted digits via arm positions, flags, etc. and then a multidigit number defined a word in a codebook. Although as the E-Sylum article said, the systems were fast compared to previous communication, the staffing requirements made them expensive and they were almost exclusively for government use.