Diesels such as the Sulzers and English Electrics had all-speed governors on the engines, so there were no fixed notches as such on the controllers. For Class 47s, the power controller itself operates a regulating air valve which fed air to a cylinder in the governor, this then operated the fuel racks on the engine via linkages.
An oil vane motor in the governor also controlled a potential divider on earlier locos or a linear voltage differentiating transducer (LVDT) on those converted to ETH, to vary the excitation current in the main generator. This enables the output from the generator to match the load the engine was capable of delivering for the regulating air being fed from the power controller. The Brush/Sulzer system was well designed and it was almost impossible to overload the engine.
As regards what happens when the power controller is moved, when the power controller is moved to the "ON" position, this feeds about 5psi of air pressure to the governor. It doesn't increase the engine speed, but enables the engine to supply enough torque to apply a small amount of tractive effort running at idle speed. With the controller open to a 1/4, the regulating air is around 13psi and the engine runs faster thus delivering a greater load. The oil vane motor will increase the output from the potential divider/LVDT and the excitation current will be increased and the main generator will then produce correspondingly more voltage and current for the traction motors. 30psi in the governor was somewhere between 1/2 and 3/4 power while 50 psi is full power.
(This is taken from a reference to how the Brush two-wire Class 47/7 push-pull system worked and I've tried to remove such references to simplify things, but apologies if I've missed any.)