As per what it says in the owner's manual - with the bike jacked up, push up on the lower part of the chain just behind the rear end of the lower chain slider(as shown on the sticker on the swing arm) until the other part of the chain above the swing arm is reasonably tight, and you should have 8-10mm between the swing arm and the bit of chain you're pushing on.
I'm not surprised it felt tight if you adjusted for 10mm of up-down movement in the chain! OTOH I'd guess if it was set for the 10cm you originally mentioned it would have been quite slack.
The only thing I thought wasn't clear from the instructions is exactly which bit of the chain you measure from; the highest bit, or the bit where it dips in between the two links. The sticker on the swing arm has an arrow which could be pointing to either as it's hard to see exactly where the arrowhead ends. It wouldn't matter except that you only have 2mm tolerance between the slackest and tightest settings and you can get measurements that differ by that much depending on which point you measure from. Still, I don't suppose it's really that critical so long as you don't have it too tight so personally I'd err towards the slacker end of the range (nearer 8mm than 10mm).
