Good question. Anyways there's a lot of primary sources about the Chinese judicial procedure, so although this post is 7000~ characters it's still an overview.

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Torture was indeed a common part of the Qing judicial process. The reason behind it lies in the long history of the importance of confessions in Imperial Chinese law. The earliest fully extant Chinese legal code, which dates from 653, requires a confession to close most criminal cases, and torture to obtain a confession is permissible. But there were two major exceptions to the Tang rule:

• The old, the young, the privileged, and the disabled were legally prohibited from being tortured, and their confessions were consequently not obligatory.
• If the evidence left no room for doubt, convictions could be made even if the accused refused to confess.

The Qing continued this trend of giving especial importance to the confession of the accused, whether because of torture or not. Confession was (and is) the "final proof," required for the closure of most cases. But the Qing still left place for three exceptions to this rule, mostly practical concessions to the reality in which confessions were not always obtainable:

• As under the Tang, some people - the privileged or the weak - could not be tortured. These were the old over seventy, the young under fifteen, the disabled, the pregnant, and members of the eight privileged classes. The official commentary to the Qing Code explained: "One cannot interrogate them under torture. Only determine their guilt on the basis of all the evidence. If all the evidence is clear, then the case is completed. Although the accused does not confess, the case can still be determined, and torture must not be used to obtain a confession."
• If a suspect was at large even when one of his fellow suspects had been captured, Article 31 allowed for a determination of fact to be made based on evidence, even without the unobtainable confession. This was presumably to avoid judicial delay and the possibility of the guilty never being punished.
• If the accused was "tricky and obstinately refused to confess," even under torture, the Tang laws allowed the judge to convict without the confession. Under the Qing system, these cases were to be sent to the emperor or to the Ministry of Justice. The authorities then had the choice of releasing the accused or punishing him anyways based on other evidence. Unsurprisingly, the authorities preferred the latter.

It seems common sense that most people put under severe enough torture will say almost anything. The Chinese were not dumb and realized this. Here are excerpts from some texts from magistrates, legal secretaries, and other such people, advising other magistrates:

When confession is obtained by torture, how can one's mind be at ease?

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The magistrate should consider the use of torture a last resort, to be avoided especially when he is angry or incensed. There are many cases in which suspects make false confessions and admit nonexistent crimes under torture, but as soon as the torture is over they retract their confessions. These confessions, made by suspects for fear of suffering, are not valid.

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The hearing and settling of cases do not lie in using torture to interrogate and seek a confession; it consists of calmly analyzing whether [the statements] are true or not.

There were also official restrictions to make torture more reliable. Strong evidence was legally required beforehand. Commentary to Article 404 states "if the guilt of the accused is already certain, but the accused is crafty and blames another person and will not confess, interrogation by torture may be applied."

The types of torture were also legally restricted. For the use of pressing stick torture, considered "unusual torture to be employed if you absolutely cannot avoid it," the law stated that "if the official does not obtain a truthful disposition, only then may he apply the sticks one at a time," and even then only if the crime was robbery or homicide. Then again "only if the person on whom it is permitted to use the pressing sticks fails to give a true statement may the pressing sticks be applied one time. If he refuses once again to make a truthful statement, they may be applied once more. It is absolutely not permitted for the official applying torture to use them many times arbitrarily" without special authorization from the government (or more specifically the Ministry of Justice).

So the ideal magistrate was like the legal scholar Lu Longqi, who in the 17th century "left the implements of torture hanging [on the wall] but did not use them." Of course, the reality was different from the ideal. First there's the issue of the magistrate not being the one actually delivering the torture. To quote one magistrate's guidebook,

[Whether to use torture or not] is entirely in the hands of the magistrate, but whether it is applied severely or lightly, whether it allows the culprit to live or kills him, is up to the corrupt lictors.

Another issue is that, to quote from Death by a Thousand Cuts, "confession cannot be readily extorted when the victim knows exactly how long he may suffer, that he is guaranteed recovery, and that all these limits must be respected in court. Lictors and magistrates alike were tempted to ignore the regulations in order more effectively to intimidate their victims."

Emperors occasionally remarked on this. In 1679, for example, the Kangxi Emperor noted that illegal torture devices such as "box-beds" and "head-squeezers" were in use and reminded the magistrates that "those who indulge in such cruelties and thereby cause the deaths of human beings will receive the severest sentence provided by law." The reminder does not seem to have had as much effect as hoped, since in 1698 the Kangxi Emperor complained that the box-bed was still being used, and that some magistrates were shortening pressing sticks to deliver more pain. But for the magistrates, for whom case completion was important for their future career, the temptation of excessive torture was often hard to resist.

As for your second question about the tokens, yes, they existed, although the wuxia movie versions may not necessarily be what they actually looked like. Just like in the modern world, Qing trials had a lot of ritual attached to it (I don't mean "ritual" necessarily in a religious sense or with its Confucian connotations, but more like what /u/Mictlantecuhtli talks about here). So one of these rituals was that the magistrate threw bamboo tallies onto the ground when ordering the use of torture.

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See:

• Death by a Thousand Cuts
• True crimes in eighteenth-century China: twenty case histories
• The Limits of the Rule of Law in China
• 명청시대 사회경제사