At the time, as you note, the only real way to signal between ships in a fleet was to use signal flags (a state of affairs that would last until after WWI). At the time of Trafalgar, the RN was using a flag system that had been invented in 1799 by Admiral Howe, and improved in 1800 by a Captain Home Popham. This system relied on a set of numerical flags, from 0-9. Under Howe's original system, each letter of the alphabet was assigned a number, allowing messages to be spelt out. To allow for more concise signals, a signal book was also issued. This contained two or three flag combinations for commonly sent messages, such as an order to anchor or a notification that the enemy was in sight. Howe's system was rather cumbersome for messages that were not contained in the signal book, as this required multiple hoists to spell out words letter by letter. Popham solved this problem by expanding the signal book, giving three or four flag codes for frequently used words. As an example, 'England' was encoded as 253, while 'that' was encoded as 863. This sufficed for all but one word in Nelson's famous message - 'duty' was not in the signal book, and so had to be spelt out using the alphabetical combinations. To show that a flag signal was using Popham's method, it was preceded by a special 'telegraph' flag, and finished with another special flag, the 'finishing' flag.