What's responsible for this astonishing fact? If you look back at the reasoning above, you see it's a consequence of associativity, commutativity, and distributivity. That's a pretty huge set of things! And it makes addition _really_ nice in this representation.
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In particular, it means that although the numerals have different meanings in different locations, in many ways they continue to _behave_ as though they are in some sense "the same". They're _not_ the same. But they retain many of the same affordances, in modern interface lingo.
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You can go through the same kind of thing, trying to figure out how to multiply two numbers: wx*yz = (w*10+x)*(y*10+z) = x*y*10*10 + ... I won't go through it, but you can guess what happens: you get the grade-school algorithm for multiplication.
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And, again, even though the numerals have very different meanings in different positions, they have a lot of the same affordances, and so behave in some ways as the "same" object.
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You can go through this with long division. Same story.
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At this point this new numeral system looks vastly superior to roman numerals. It's exploiting all this structure to get compact representations, which don't require new symbols, & which exploit deep properties of numbers to simplify addition, multiplication, & division. Amazing!
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I'm far from an expert on the history of mathematics or its representations. The story above is unrealistic in many ways. Still, I think it gives at least a hint of the incredible mathematical and design insight required to invent arabic numerals.
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And, of course, this story requires many incredible earlier insights: words, the alphabet, various ideas about multiplication and addition, and so on.
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To finish, a fun question: is there some way to improve still further on arabic numerals? I believe the answer is almost certainly yes! But that's a thread for another day.
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Replying to @michael_nielsen
An example of a specialized improvement is the representation used in a carry save adder. In this representation addition can be done in parallel in constant depth.
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