In chapter 100, Ahab meets another whaling captain who's lost a limb to Moby Dick. The other captain says his arm got snagged on one of his harpoon's barbs, and Moby Dick dragged him down beneath the waves. He would have drowned, had the harpoon barb not ripped a gash clear down the length of his arm and thus worked itself free. The gash was so severe that the ship's doctor had no choice but to amputate the arm. Yet, after relating this story to Captain Ahab, he implies that his arm is still inside Moby Dick much like Captain Ahab's leg, which the white whale bit off. Was this just a continuity error on Melville's part?
More likely the captain was being hyperbolic. He knew the whale hadn't actually swallowed his arm, but was using the phrase as a dramatic metaphor.