The Semaphore Guy Credit: Jim Croft

Semaphore and flashing light can be used interchangeably for many purposes, but semaphore is more rapid for short-distance transmission in clear daylight and may be used to send messages to several addressees at once if they are in suitable positions. Because of its speed, semaphore is better adapted to the sending of long messages than are other visual methods. When radio silence is imposed, semaphore is the best substitute for handling administrative traffic. It is more secure than a light or radio because there is less chance for interception by unauthorized persons.

Both the ancient Greeks and the Romans are known to have signaled over short distances with torches and flags. The telescope, invented in about 1600, greatly increased the range of such systems. In 1794, Claude Chappe, a French engineer, devised a semaphore that could carry a message 230 km (144 m) from Lille to Paris in two minutes. He constructed a series of towers about 8 to 16 km (5 to 10 mi) apart and within sight of each other. On each tower was mounted a pivoted beam with arms at the end. A telescope was located at each tower so that an operator could relay the beam-arm signals.

The electric telegraph supplanted Chappe's semaphore for long-distance signaling in about 1850; however, Hutton Gregory, a telegraph engineer on the British railroads, modified Chappe's system by employing moving metal arms or rows of lights, mounted on towers, to signal trains. The railway semaphore is still in use.

Semaphores also remain in use for maritime communications. The U.S. Navy uses a system in which an operator grasps half-red and half-yellow flags; the arms are extended at various angles to indicate letters of the alphabet.
An excellent link which has the complete alphabet online can you find at http://www.anbg.gov.au/flags/semaphore.html.