For general markup you can use <span> with a class, like <span class="ship_name">Invincible</span> or <span class="thoughts">I have a bad feeling about this</span>.
For chapters, you could wrap each of them in a block (I think that's what HTML5 does), but it's enough to use <h1>Chapter Title</h1> at the beginning of each. Having each chapter in a separate file is a good idea too.
Do not use <h1>Chapter 4</h1><h2>The Swamp</h2>, unless "The Swamp" is a subsection of Chapter 4. If you want to style the chapter number and title differently, you can use something like <h1>Chapter 4<br/><span class="title">The Swamp</span></h1>.
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