Night after night, crowds of pedestrians huddled on Princes Bridge in the Australian city of Melbourne to watch a dazzling neon spectacle on the roof of the Allen’s Sweets factory. First, a giant twist-wrapped sweet would light up, then a yellow spaceship soared above a toffee before exploding into colorful sparkles. The logo of Allen’s Kool Mints appeared with the word “cool” flashing repeatedly and, for the finale, a couple of Anticol cough drops slipped out of a packet.

Known as the “skyline spectacular,” it was a fabulous free show courtesy of Allen’s, which had advertised its candies in animated neon lights above the factory since the mid-1950s. But when the area was redeveloped in the late 1980s, Allen’s elaborate neons were not included. A campaign was mounted to move them to another building, and Allen’s offered to contribute to the cost, but the city council vetoed the proposal, and the “skyline spectacular” disappeared. The saga of Allen’s neons is told by the typography designer Stephen Banham in his book Characters: Cultural stories revealed through typography, which explores how signs of different types, sizes and styles have defined Melbourne over the years. It would have been possible for him to have described almost any other city, town or village through its signage, but Mr. Banham chose Melbourne because he lives and works there, and knows its signs so well. The result is a spirited and perceptive cultural history of the city and its signage, which he tells with aplomb.

Graphic designers have long been fascinated by the vernacular signs that appear in public places, generally with a practical purpose, whether it is to sell something, to identify our whereabouts or to alert us to danger. When the American designer Robert Brownjohn moved from New York to London in 1960, one of the first things he did was to drive around the streets taking photographs of the signage. It was his way of getting to know his new city.

We all make similar judgments about places based on their signs, often without realizing that we are doing so. You do not need a doctorate in typography to spot the National Debt Clock when heading up Sixth Avenue to Times Square in New York, or to enjoy watching Lucozade, the fizzy health drink, being poured into a glass on an illuminated sign on the road from Heathrow Airport to central London.

The stories behind such signs can be engaging. The National Debt Clock was installed in 1989 by a New York real estate developer, Seymour Durst, who was concerned that his compatriots were overly complacent about the extent of the U.S. national debt. (It was less than $3 trillion then, and is now over $15 trillion.) And when the 50-year-old Lucozade sign was dismantled in 2004, local residents were so upset that they lobbied for its return. Unlike the efforts to save the “skyline spectacular” in Melbourne, their campaign was successful.

As Mr. Banham points out, an intriguing aspect of public signage is that it often paints a deeply idiosyncratic picture of its location. If you walk along a street, many of the signs you see will still be serving the purpose for which they were put there, but others will be obsolete. They may be advertising defunct products, or identifying a company that has long since left a building. These “ghost signs,” as they are called, usually survive by accident, because no one has bothered to remove them, or they were covered up for years only to be exposed during construction work. As a result, they give us random glimpses of the past.

I live in Shoreditch, once one of the poorest parts of London, which has changed radically in recent years. Gentrification has brought many benefits — organic food stores, great restaurants and art galleries, a farmer’s market, even a local airport in London City — but it has erased elements of the old Shoreditch. Among the things I miss the most are the “ghost signs” like the one above the long empty, now demolished Victory Cafe on Hackney Road. The area seems duller without them, and less distinctive.

In Characters, Mr. Banham considers the signs — past and present — that have characterized Melbourne. Some of them relate to historic events, like the neon cyclist outside a cycle store in Carlton, which was opened by Nino Borsari, the Italian cycling champion, when he found himself stranded in Australia after the outbreak of World War II. So famous did “Borsari’s Corner” become that an Italian president, Giuseppe Saragat, gave a televised speech there on an official visit in 1967.

Other signs evoke social changes. So many Italian immigrants came to live in Melbourne during the postwar years that the manager of the Fitzroy Swimming Pool had the words “Aqua Profonda” painted beneath the “Deep Water” sign. He was worried that Italian children might not understand the English version. During the same period, a flurry of Italian restaurants opened hoping to cash in when the city hosted the Olympic Games in 1956. The slender neon lettering that spelled out their names was dubbed “spaghetti type.”

Many of the signs in Characters are part of Melbourne’s industrial heritage. The flamboyant candy manufacturer, Macpherson Robertson, treated the city to a particularly theatrical sign. He called his company “MacRobertson” and wrote an ornate “signature” as its logo, which he spelled out above his factory in some 1,100 light bulbs that switched on one by one.

His sign has vanished, but another local landmark has been luckier. The neon “Skipping Girl,” known as “Little Audrey,” that appeared above the Nycander and Co. Vinegar factory in 1936, was removed when the building was demolished in 1968. The public outcry prompted Nycander’s new owner to commission a replica, which was installed nearby, even though no one knows who Little Audrey was, or why the sight of a skipping girl would make anyone want to buy vinegar.

The Allen’s skyline spectacular (1986) Back view, Erica Downward, photograph compilation . Images: State Library of Victoria Pictures Collection